<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 27, 2000
REGISTRATION NO. 333-[ ]
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT Under the Securities Act of 1933
MEDIA METRIX, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 7389 11-3374729
(State or other jurisdiction of (Primary Standard Industrial (IRS Employer Identification No.)
incorporation or organization) Classification Code Number)
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MEDIA METRIX, INC.
250 PARK AVENUE SOUTH, NEW YORK, NEW YORK 10003
(212) 515-8700
(Address, including zip code, and telephone
number, including area code, of registrant's principal executive offices)
GAIL A. BALCERZAK, ESQ.
GENERAL COUNSEL AND SECRETARY
MEDIA METRIX, INC.
250 PARK AVENUE SOUTH
NEW YORK, NEW YORK 10003
(212) 515-8700
(Name and address, including zip code, and telephone number,
including area code, of agent for service)
COPIES TO:
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AVIVA DIAMANT, ESQ. ALAN N. SHAPIRO, ESQ. ERIC SIMONSON, ESQ.
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON GENERAL COUNSEL BROBECK, PHLEGER & HARRISON LLP
ONE NEW YORK PLAZA JUPITER COMMUNICATIONS, INC. 1633 BROADWAY, 47TH FLOOR
NEW YORK, NEW YORK 10004 627 BROADWAY NEW YORK, NEW YORK 10019
(212) 859-8000 NEW YORK, NEW YORK 10012 (212) 581-1600
(212) 780-6060
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE PUBLIC:
As soon as practicable after the effective date of this registration statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED UNIT PRICE REGISTRATION FEE
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Common Stock, par value $0.01 per 19,046,596(1) Not Applicable Not Applicable $128,247(2)
share
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(1) Based on 20,133,822 shares of common stock, $.001 par value, of Jupiter
Communications, Inc., which is the maximum number of shares of Jupiter
common stock that may be outstanding immediately prior to the completion of
the transactions herein, assuming exercise of all outstanding options to
purchase shares of Jupiter common stock and the conversion of an
outstanding promissory note, and an exchange ratio of 0.946 of a share of
Media Metrix common stock for each share of Jupiter common stock.
(2) Pursuant to Rules 457(f)(1) and 457(c) under the Securities Act of 1933, as
amended, the registration fee has been calculated based on a price of
$25.505 per share of common stock of Jupiter (the average of the high and
low price per share of common stock of Jupiter as reported on the Nasdaq
National Market on July 20, 2000), and the maximum number of shares of such
common stock that may be outstanding immediately prior to the completion of
the transactions contemplated hereby as set forth in footnote 1 above.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
<PAGE> 2
[MEDIA METRIX LOGO] [JUPITER LOGO]
[____ __], 2000
Dear Stockholder:
The board of directors of Media Metrix, Inc. and the board of directors
of Jupiter Communications, Inc. each has unanimously approved a merger between
Media Metrix and Jupiter. If we complete the merger, Jupiter will become a
wholly owned subsidiary of Media Metrix. Jupiter stockholders will receive 0.946
of a share of Media Metrix common stock for each share of Jupiter common stock
they own, and Media Metrix will be renamed Jupiter Media Metrix, Inc.
Immediately after the merger, Jupiter stockholders will own approximately 45%,
and Media Metrix stockholders will own approximately 55%, of Jupiter Media
Metrix.
On [____ __], 2000, the last trading day before the date of the
accompanying joint proxy statement/prospectus, Media Metrix common stock, which
trades on the Nasdaq National Market under the symbol "MMXI," closed at $[___]
and Jupiter common stock, which trades on the Nasdaq National Market under the
symbol "JPTR," closed at $[___].
We have each scheduled a special meeting of our stockholders to vote on
various proposals relating to the merger. Stockholders of Media Metrix must
vote, first, to approve an amendment to Media Metrix' charter to authorize
enough shares of common stock to issue in the merger and, second, to approve the
issuance of those shares in the merger, and the stockholders of Jupiter must
vote in favor of adopting the merger agreement. We cannot complete the merger
unless the stockholders of both companies vote in favor of these proposals.
Media Metrix is also asking its stockholders to approve changing its name to
Jupiter Media Metrix, Inc. and to approve an increase in the number of shares of
Media Metrix common stock that may be issued under two employee stock plans to
accommodate the increase in its employee base after the merger.
The accompanying joint proxy statement/prospectus gives you detailed
information about Media Metrix, Jupiter and the merger, and includes a copy of
the merger agreement. We encourage you to read the entire document carefully
before deciding how to vote. IN PARTICULAR, YOU SHOULD READ THE "RISK FACTORS"
SECTION BEGINNING ON PAGE 19 FOR A DESCRIPTION OF VARIOUS RISKS YOU SHOULD
CONSIDER IN EVALUATING THE MERGER.
We are very enthusiastic about the merger. We believe that the merger
will create the global leader in Internet information services by providing a
comprehensive product and services portfolio and establishing a platform for
worldwide expansion and new business initiatives.
We join all the other members of the two companies' boards of directors
in recommending that you vote "FOR" each of the proposals being submitted to
stockholders.
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Tod Johnson Gene DeRose
Chairman and Chief Executive Officer Chairman and Chief Executive Officer
Media Metrix, Inc. Jupiter Communications, Inc.
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NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED
THE MEDIA METRIX COMMON STOCK TO BE ISSUED IN CONNECTION WITH THE MERGER OR
DETERMINED IF THIS JOINT PROXY STATEMENT/PROSPECTUS IS ACCURATE OR ADEQUATE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS JOINT PROXY STATEMENT/PROSPECTUS IS DATED [____ __], 2000, AND IS FIRST
BEING MAILED TO STOCKHOLDERS ON [____ __], 2000.
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ADDITIONAL INFORMATION
This joint proxy statement/prospectus incorporates important business and
financial information about Media Metrix from documents Media Metrix has filed
with the SEC that are not included in or delivered with this joint proxy
statement/prospectus. If you call or write, Media Metrix will send you copies of
these documents, excluding exhibits, without charge. You may contact Media
Metrix at:
Media Metrix, Inc.
250 Park Avenue South
New York, New York 10003
Attention: Investor Relations
Telephone number: (212) 515-8700
If you call or write, Jupiter, although it is not incorporating any
documents by reference, will send you copies of the documents which it has filed
with the SEC, excluding exhibits, without charge. You may contact Jupiter at:
Jupiter Communications, Inc.
627 Broadway
New York, New York 10012
Attention: Investor Relations
Telephone number: (212) 780-6060
IN ORDER TO RECEIVE TIMELY DELIVERY OF THE DOCUMENTS IN ADVANCE OF THE
SPECIAL STOCKHOLDERS MEETINGS, YOU SHOULD MAKE YOUR REQUEST NO LATER THAN [____
__], 2000.
For more information on the matters incorporated by reference in this joint
proxy statement/prospectus, please see "Where You Can Find More Information" on
page 133.
<PAGE> 4
[MEDIA METRIX LOGO]
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON [____ __], 2000
To the Stockholders of Media Metrix, Inc.:
A special meeting of the stockholders of Media Metrix will be held at the
offices of Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza, 29th
Floor, New York, New York 10004 on [ ], 2000, at 9:00 a.m., local time, to
consider and vote on the following:
1. To approve a proposal to amend the certificate of incorporation of
Media Metrix:
- To change the name of Media Metrix to Jupiter Media Metrix,
Inc.; and
- To increase the authorized number of shares of Media Metrix
common stock from 60,000,000 to 150,000,000 shares.
2. To approve the proposed issuance of shares of Media Metrix common
stock in the merger of MMX Acquisition Corp., a wholly owned subsidiary of Media
Metrix, with and into Jupiter Communications, Inc. in accordance with the
Agreement and Plan of Merger, dated as of June 26, 2000, among Media Metrix, MMX
Acquisition Corp. and Jupiter. A copy of the merger agreement is attached to the
accompanying joint proxy statement/prospectus as Annex A.
3. To approve an amendment to the Media Metrix 2000 Equity Incentive
Plan to increase the maximum number of shares of Media Metrix common stock
available for issuance in calendar year 2000 under the plan from 2,000,000 to
4,000,000, to increase the maximum amount of the annual increase in shares
available for issuance under the plan from the lesser of 1,000,000 shares or 4%
of the outstanding shares to the lesser of 2,000,000 shares or 4% of the
outstanding shares, and to increase the maximum number of shares available for
issuance during the term of the plan from 6,000,000 to 12,000,000.
4. To approve an amendment to the Media Metrix 2000 Employee Stock
Purchase Plan to increase the maximum number of shares of Media Metrix common
stock available for issuance under the plan from 100,000 to 2,000,000.
5. To act on any other matters that may properly be brought before the
special stockholders meeting or any adjournment or postponement of the meeting.
THE BOARD OF DIRECTORS OF MEDIA METRIX UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR" THESE PROPOSALS.
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Only stockholders of record at the close of business on [____ __], 2000 are
entitled to notice of, and to vote at, the meeting or any adjournment or
postponement of the meeting.
You are cordially invited to attend the special stockholders meeting.
Whether or not you plan to attend, please act promptly to vote your shares on
the proposals described above. You may vote your shares by completing, signing,
and dating the enclosed proxy card and returning it as promptly as possible in
the enclosed postage-paid envelope. You may revoke your proxy in the manner
described in the accompanying joint proxy statement/prospectus at any time
before it has been voted at the special meeting.
If you attend the special stockholders meeting, you may vote your shares in
person even if you have previously submitted a proxy.
By Order of the Board of Directors,
Gail A. Balcerzak
Secretary
New York, New York
[____ __], 2000
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[JUPITER LOGO]
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON [____ __], 2000
To the Stockholders of Jupiter Communications, Inc.:
A special meeting of the stockholders of Jupiter will be held at
[___________], New York, New York [____] on [____ __], 2000, at 9:00 a.m., local
time, to consider and vote on the following:
1. To approve a proposal to adopt the Agreement and Plan of Merger,
dated as of June 26, 2000, among Media Metrix, Inc., MMX Acquisition Corp.,
a wholly owned subsidiary of Media Metrix, and Jupiter under which MMX
Acquisition Corp. will merge with and into Jupiter. Jupiter stockholders
will receive, for each share of Jupiter common stock owned by them, 0.946
of a share of Media Metrix common stock, as described in the accompanying
joint proxy statement/prospectus. A copy of the merger agreement is
attached to the joint proxy statement/prospectus as Annex A.
2. To act on any other matters that may properly be brought before the
special stockholders meeting or any adjournment or postponement of the
meeting.
THE BOARD OF DIRECTORS OF JUPITER UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR" THIS PROPOSAL.
Only stockholders of record at the close of business on [____ __], 2000 are
entitled to notice of, and to vote at, the meeting or any adjournment or
postponement of the meeting.
You are cordially invited to attend the special stockholders meeting.
Whether or not you plan to attend, please act promptly to vote your shares on
the proposals described above. You may vote your shares by completing, signing,
and dating the enclosed proxy card and returning it as promptly as possible in
the enclosed postage-paid envelope. You may revoke your proxy in the manner
described in the accompanying joint proxy statement/prospectus at any time
before it has been voted at the special meeting.
If you attend the special stockholders meeting, you may vote your
shares in person even if you have previously submitted a proxy.
By Order of the Board of Directors,
Jean K. Robinson
Secretary
New York, New York
[____ __], 2000
<PAGE> 7
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TABLE OF CONTENTS
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QUESTIONS AND ANSWERS ABOUT THE MEDIA METRIX/JUPITER MERGER...................................................... 1
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS....................................................... 4
SUMMARY.......................................................................................................... 5
RISK FACTORS..................................................................................................... 19
Risks Relating to the Merger Transaction...................................................................... 19
Risks Relating to the Combined Enterprise..................................................................... 20
Risks Relating to Media Metrix................................................................................ 21
Risks Relating to Jupiter..................................................................................... 31
THE SPECIAL STOCKHOLDERS MEETINGS................................................................................ 39
Time and Place of the Special Meetings; Matters To Be Considered.............................................. 39
Votes Required................................................................................................ 39
Record Date; Quorum........................................................................................... 40
How Proxies will be Voted at the Special Stockholders Meetings................................................ 41
Treatment of Abstentions and Broker Non-Votes................................................................. 41
How to Revoke a Proxy......................................................................................... 41
Solicitation of Proxies....................................................................................... 41
Appraisal Rights.............................................................................................. 42
THE MERGER....................................................................................................... 43
General....................................................................................................... 43
Background of the Merger...................................................................................... 43
Reasons for the Merger; Recommendations of the Boards of Directors............................................ 46
Opinion of Financial Advisor to Media Metrix.................................................................. 50
Opinion of Financial Advisor to Jupiter....................................................................... 57
Interests of Directors and Executive Officers of Jupiter in the Merger........................................ 62
Accounting Treatment.......................................................................................... 64
Federal Income Tax Consequences............................................................................... 64
Regulatory Matters............................................................................................ 65
Board of Directors and Executive Officers of Jupiter Media Metrix After the Merger............................ 66
Federal Securities Laws Consequences; Stock Transfer Restrictions............................................. 68
THE MERGER AGREEMENT............................................................................................. 69
General....................................................................................................... 69
Structure of the Merger....................................................................................... 69
Closing; Effective Time....................................................................................... 69
What Stockholders Will Receive in the Merger.................................................................. 69
Procedures for Surrender of Jupiter Certificates; Fractional Shares........................................... 69
Representations and Warranties................................................................................ 70
Conduct of Business........................................................................................... 70
No Solicitation............................................................................................... 72
Employee Plans and Benefit Arrangements....................................................................... 73
Jupiter Stock Options......................................................................................... 73
Governance.................................................................................................... 74
Indemnification and Insurance................................................................................. 74
Expenses...................................................................................................... 75
Conditions to the Completion of the Merger.................................................................... 75
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Termination.................................................................................................. 76
Amendments................................................................................................... 78
THE VOTING AGREEMENTS........................................................................................... 79
General...................................................................................................... 79
Media Metrix Voting Agreement with Jupiter Stockholders...................................................... 79
Jupiter Voting Agreement with Media Metrix Stockholders...................................................... 79
AMENDMENT OF THE MEDIA METRIX 2000 EQUITY INCENTIVE PLAN........................................................ 80
General...................................................................................................... 80
The Proposed Amendment to the 2000 Equity Incentive Plan..................................................... 80
General Description of the 2000 Equity Incentive Plan........................................................ 81
Plan Benefits................................................................................................ 85
Federal Income Tax Consequences Under the 2000 Equity Incentive Plan......................................... 86
AMENDMENT OF THE MEDIA METRIX 2000 EMPLOYEE STOCK PURCHASE PLAN................................................. 87
General...................................................................................................... 87
The Proposed Amendment to the 2000 Employee Stock Purchase Plan.............................................. 87
General Description of the 2000 Employee Stock Purchase Plan................................................. 87
Plan Benefits................................................................................................ 88
Federal Tax Consequences Under the 2000 Purchase Plan........................................................ 89
UNAUDITED PRO FORMA CONDENSED COMBINING FINANCIAL INFORMATION................................................... 90
Notes to Unaudited Pro Forma Condensed Combining Financial Statements........................................ 97
COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION..................................................... 100
THE BUSINESS OF MEDIA METRIX, INC............................................................................... 101
THE BUSINESS OF JUPITER COMMUNICATIONS, INC..................................................................... 102
Overview..................................................................................................... 102
Jupiter Research Services.................................................................................... 102
Jupiter Conferences.......................................................................................... 106
Custom and Other Research.................................................................................... 107
Clients...................................................................................................... 107
Sales and Marketing.......................................................................................... 108
Research Analysts and Methodology............................................................................ 108
Competition.................................................................................................. 110
Intellectual Property and Proprietary Rights................................................................. 110
Employees.................................................................................................... 111
Description of Properties.................................................................................... 111
Legal Proceedings............................................................................................ 111
Corporate History............................................................................................ 111
JUPITER MANAGEMENT.............................................................................................. 112
Executive Officers and Directors............................................................................. 112
Information Concerning Executive Officers and Directors...................................................... 112
Director Compensation........................................................................................ 113
Compensation Committee Interlocks and Insider Participation.................................................. 113
Executive Compensation....................................................................................... 113
Option Grants In Last Fiscal Year............................................................................ 114
Aggregate Option Exercises In Last Fiscal Year And Fiscal Year-End Option Values............................. 115
Employment Agreements........................................................................................ 116
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Certain Relationships and Related Transactions............................................................... 118
PRINCIPAL STOCKHOLDERS OF JUPITER............................................................................... 119
SELECTED CONSOLIDATED FINANCIAL DATA OF JUPITER................................................................. 120
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF JUPITER................ 121
Overview..................................................................................................... 121
Results of Operations........................................................................................ 123
Comparison of Three Months Ended March 31, 2000 and 1999..................................................... 123
Comparison of the Years Ended December 31, 1999, 1998 and 1997............................................... 124
Income Taxes................................................................................................. 126
Unaudited Quarterly Results of Operations Data............................................................... 126
Liquidity and Capital Resources, Quarters Ended March 31, 2000 and 1999...................................... 127
Liquidity and Capital Resources, Years Ended December 31, 1999, 1998, and 1997............................... 128
Recent Accounting Pronouncements............................................................................. 129
Effects of Inflation......................................................................................... 129
Quantitative and Qualitative Disclosures about Market Risk................................................... 129
COMPARISON OF STOCKHOLDER RIGHTS................................................................................ 130
WHERE YOU CAN FIND MORE INFORMATION............................................................................. 133
EXPERTS......................................................................................................... 135
LEGAL MATTERS................................................................................................... 135
STOCKHOLDER PROPOSALS FOR ANNUAL MEETINGS....................................................................... 136
CONSOLIDATED FINANCIAL STATEMENTS............................................................................... F-1
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LIST OF ANNEXES
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ANNEX A Agreement and Plan of Merger........................................................ A-1
ANNEX B Voting Agreement of Media Metrix Stockholders....................................... B-1
ANNEX C Voting Agreement of Jupiter Stockholders............................................ C-1
ANNEX D Opinion of Thomas Weisel Partners................................................... D-1
ANNEX E Opinion of Morgan Stanley & Co...................................................... E-1
</TABLE>
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<PAGE> 10
QUESTIONS AND ANSWERS ABOUT THE MEDIA METRIX/JUPITER MERGER
Q: WHAT WILL JUPITER STOCKHOLDERS RECEIVE IN THE MERGER?
A: If the merger is completed, Jupiter stockholders will receive 0.946 of a
share of Media Metrix common stock for each share of Jupiter common stock
they own. This 0.946 exchange ratio will not change. Because the market
price of Media Metrix common stock may change from day to day, Jupiter
stockholders cannot be sure of the market value of the Media Metrix common
stock they will receive in the merger at the time they vote their shares.
Immediately after the merger, former Jupiter stockholders will own
approximately 45% of Media Metrix, which will be renamed Jupiter Media
Metrix, Inc.
Q: WHAT WILL MEDIA METRIX STOCKHOLDERS RECEIVE IN THE MERGER?
A: After the merger, Media Metrix stockholders will continue to hold their
shares in the company. Immediately after the merger, Media Metrix
stockholders will own approximately 55% of Media Metrix, which will be
renamed Jupiter Media Metrix, Inc.
Q: WHAT DO I NEED TO DO NOW?
A: After you have carefully read this joint proxy statement/prospectus, please
fill out, sign and date the enclosed proxy card and mail it in the enclosed
prepaid return envelope as soon as possible, so that your shares may be
represented and voted at your company's special stockholders meeting. You
may also attend your company's special stockholders meeting in person.
Q: WHAT ARE STOCKHOLDERS BEING ASKED TO VOTE ON AT THE STOCKHOLDERS MEETINGS?
A: Media Metrix Stockholders. For Media Metrix to complete the merger, Media
Metrix stockholders must vote, first, to approve an amendment to Media
Metrix' charter to increase the number of shares of common stock Media
Metrix is authorized to issue, and, second, to approve the issuance of
shares of Media Metrix common stock in the merger. Media Metrix
stockholders are also being asked to approve an amendment to Media Metrix'
charter to change the company's name to Jupiter Media Metrix, Inc. and
amendments to two Media Metrix employee stock plans to increase the number
of shares of Media Metrix common stock available for issuance under those
plans. IF YOU DO NOT VOTE YOUR MEDIA METRIX SHARES, THE EFFECT WILL BE A
VOTE AGAINST THE AMENDMENT TO MEDIA METRIX' CHARTER. If the proposal to
amend the charter is not approved, the merger cannot proceed because Media
Metrix does not presently have enough shares available to issue in the
merger.
Jupiter Stockholders. For Jupiter to complete the merger, Jupiter
stockholders must vote to adopt the merger agreement. IF YOU DO NOT VOTE
YOUR JUPITER SHARES, THE EFFECT WILL BE A VOTE AGAINST THE MERGER AGREEMENT
AND THE MERGER.
THE BOARD OF DIRECTORS OF EACH COMPANY UNANIMOUSLY RECOMMENDS VOTING "FOR"
EACH OF THE PROPOSALS BEING PRESENTED AT THE SPECIAL STOCKHOLDER MEETING.
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<PAGE> 11
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER
AUTOMATICALLY VOTE MY SHARES FOR ME?
A: No. Your broker is not permitted to vote your shares without specific
instructions from you. Unless you follow the directions your broker
provides you regarding how to instruct your broker to vote your shares,
your shares will not be voted.
Q: CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY PROXY CARD?
A: Yes. You may change your vote:
- by writing to the corporate secretary of your company prior to your
company's special stockholders meeting stating that you are revoking
your proxy;
- by signing a later-dated proxy card and returning it by mail prior to
your company's special stockholders meeting; or
- by attending your company's special stockholders meeting and voting in
person.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. After we complete the merger, Jupiter Media Metrix will send Jupiter
stockholders written instructions explaining how to exchange their stock
certificates. Media Metrix stockholders will not need to exchange their
stock certificates. The old stock certificates will continue to represent
an identical number of shares of Jupiter Media Metrix common stock.
Q: WHEN DO YOU EXPECT TO COMPLETE THE MERGER?
A: We are working toward completing the merger as quickly as possible. We
anticipate completing the merger shortly after the two special stockholders
meetings are held, assuming that the stockholders of both companies approve
the transaction.
Q: WILL THE MERGER BE TAXABLE TO ME?
A: The merger generally will not be taxable to either Media Metrix or Jupiter
stockholders.
Q: WILL I HAVE THE RIGHT TO HAVE MY SHARES APPRAISED IF I DISSENT FROM THE
MERGER?
A: No. Both Media Metrix and Jupiter are organized under Delaware law. Under
Delaware law, neither Media Metrix stockholders nor Jupiter stockholders
have appraisal rights in connection with the merger.
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Q: WHO CAN ANSWER MY QUESTIONS?
A: If you are a Media Metrix stockholder and have questions or want additional
copies of this joint proxy statement/prospectus, please contact:
Media Metrix, Inc.
250 Park Avenue South
New York, New York 10003
Attention: Investor Relations
Telephone Number: (212) 515-8700
If you are a Jupiter stockholder and have questions or want additional
copies of this joint proxy statement/prospectus, please contact:
Jupiter Communications, Inc.
627 Broadway
New York, New York 10012
Attention: Investor Relations
Telephone Number: (212) 780-6060
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<PAGE> 13
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This joint proxy statement/prospectus contains or incorporates by
reference forward-looking statements, including information concerning possible
or assumed future results of operations of Media Metrix and Jupiter, that are
subject to risks and uncertainties. Such forward-looking statements are
necessarily dependent upon assumptions, estimates and dates that may be
incorrect or imprecise and involve known and unknown risks, uncertainties and
other factors, including those set forth under "Risk Factors," "The
Merger--Background of the Merger," "The Merger--Reasons for the Merger;
Recommendations of the Boards of Directors," "The Merger--Opinion of Financial
Advisor to Media Metrix" and "The Merger--Opinion of Financial Advisor to
Jupiter," and those preceded by, followed by or that include the words
"believes," "expects," "anticipates" or similar expressions.
The following important factors, in addition to those discussed
elsewhere in this joint proxy statement/prospectus and in the documents which
are incorporated herein by reference, could affect the industries in which Media
Metrix and Jupiter operate in general, and/or each company in particular.
Accordingly, future results could differ materially from those expressed in the
forward-looking statements contained in this joint proxy statement/prospectus:
- the speed of integration of Jupiter's and Media Metrix' businesses;
- the dependence of both companies on the continued growth of the Internet;
- continued competitive pressures;
- success of current operating plans, research and development efforts and
strategic initiatives;
- the effect of existing and future regulatory actions;
- the availability of and terms of financing to fund the anticipated growth
of the combined enterprise's business;
- changes in costs of goods and services or other inflationary effects;
- economic conditions in general and in Media Metrix' and Jupiter's specific
market areas;
- changes in federal, state, local or foreign government regulation;
- liabilities and other claims asserted against Media Metrix or Jupiter;
- changes in operating strategy or development plans;
- the ability to attract and retain qualified personnel;
- changes in acquisition and capital expenditure plans; or
- a significant delay in the expected closing of the merger.
Accordingly, you should not place undue reliance on forward-looking
statements, which speak only as of the date of this joint proxy
statement/prospectus, or, in the case of documents incorporated by reference,
the date of those documents.
All subsequent written and oral forward-looking statements attributable
to Media Metrix or Jupiter or any person acting on their behalf are expressly
qualified in their entirety by the cautionary statements contained or referred
to in this section. Neither Media Metrix nor Jupiter assumes any obligation to
update any such forward-looking statements to reflect events or circumstances
after the date of this joint proxy statement/prospectus.
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<PAGE> 14
SUMMARY
This summary highlights selected information from this joint proxy
statement/prospectus. It may not contain all of the information that is
important to you. To understand the proposed transactions fully and their
consequences to you, we urge you to read carefully the entire joint proxy
statement/prospectus and the documents we refer to in this joint proxy
statement/prospectus. Please see "Where You Can Find More Information" on page
133. We have included page references directing you to a more complete
description of each item presented in this summary.
THE MERGER (SEE PAGE 43)
Media Metrix and Jupiter have entered into a merger agreement that provides
for a merger between Jupiter and Media Metrix. As a result of the merger,
Jupiter will become a wholly owned subsidiary of Media Metrix. Each share of
Jupiter common stock will be exchanged for 0.946 of a share of Media Metrix
common stock, and Media Metrix will be renamed Jupiter Media Metrix, Inc. We
urge you to read carefully the entire merger agreement, which is attached to
this joint proxy statement/prospectus as Annex A.
THE COMPANIES
MEDIA METRIX, INC. (SEE PAGE 101)
250 Park Avenue South
New York, New York 10003
(212) 515-8700
Media Metrix is a leading provider of Internet and Digital Media
measurement products and services. Media Metrix measures usage of the entire
digital landscape, including its largest segments: the World Wide Web,
proprietary online services like America Online, software, instant messaging
applications and other digital applications. In January 1996, Media Metrix
released the first World Wide Web Audience Measurement report. Today, Media
Metrix offers a range of Internet audience, e-commerce, advertising, and
technology measurement services to leading Internet advertisers, advertising
agencies, media companies, technology companies and financial institutions.
Media Metrix' products and services enable the continued growth and development
of the Internet by providing third-party measurement data that its customers
rely on to make critical business decisions. Its data are used to buy, sell and
plan advertising, support marketing and commerce initiatives, assess
partnerships and distribution strategies and analyze competitors. Media Metrix
is based in New York City, with operations in the United States, the United
Kingdom, France, Germany, Sweden, Australia, Canada, Latin America and Japan.
JUPITER COMMUNICATIONS, INC. (SEE PAGE 102)
627 Broadway
New York, New York 10012
(212) 780-6060
Jupiter provides research and advice on Internet commerce. Senior
executives at client companies utilize Jupiter's research to make informed
business decisions in a complex and rapidly changing Internet economy. Jupiter's
research, which focuses solely on the global Internet economy, provides
Jupiter's clients with comprehensive views of industry trends, forecasts and
best practices. Jupiter's analysis and advice, supported by extensive
proprietary data, emphasizes specific, actionable findings that enable
-5-
<PAGE> 15
companies to develop effective business strategies for Internet commerce, and to
utilize the Internet to more effectively operate their businesses. Jupiter also
produces a wide range of conferences which offer senior executives the
opportunity to hear first-hand the insights of Jupiter's analysts and the
leading decision makers in the Internet and technology industries. Jupiter is
based in New York City, with operations in the United States, the United
Kingdom, Germany, Sweden, Japan and Australia.
RECOMMENDATIONS OF BOARDS OF DIRECTORS (SEE PAGE 46)
Media Metrix Stockholders. After careful consideration, the Media Metrix
board of directors unanimously recommends that you vote "FOR" the proposal to
amend Media Metrix' charter to increase the number of shares of common stock
Media Metrix is authorized to issue and to change its name to Jupiter Media
Metrix, "FOR" the proposal to approve the issuance of shares of Media Metrix
common stock in the merger, and "FOR" the proposals to increase the number of
shares of Media Metrix common stock available for issuance under Media Metrix'
two employee stock plans.
Jupiter Stockholders. After careful consideration, the Jupiter board of
directors unanimously recommends that you vote "FOR" the proposal to adopt the
merger agreement.
OPINIONS OF FINANCIAL ADVISORS (SEE PAGES 50 AND 57)
Media Metrix. Thomas Weisel Partners LLC, Media Metrix' financial advisor
in connection with the merger, delivered its oral opinion to the Media Metrix
board of directors, which was later confirmed in writing, that, as of its date
and based upon and subject to the various considerations described in it, the
0.946 exchange ratio is fair to Media Metrix from a financial point of view.
This opinion is not a recommendation to any Media Metrix stockholder as to how
to vote. We have attached a copy of Thomas Weisel Partners' written opinion as
Annex D to this joint proxy statement/prospectus. You should read it in its
entirety.
Jupiter. Morgan Stanley & Co. Incorporated, Jupiter's financial advisor in
connection with the merger, delivered its oral opinion to the Jupiter board of
directors, which was later confirmed in writing, that, as of its date and based
upon and subject to the various considerations described in it, the 0.946
exchange ratio is fair from a financial point of view to the holders of
Jupiter's common stock. This opinion is not a recommendation to any Jupiter
stockholder as to how to vote. We have attached a copy of Morgan Stanley's
written opinion as Annex E to this joint proxy statement/prospectus. You should
read it in its entirety.
THE SPECIAL STOCKHOLDERS MEETINGS (SEE PAGE 39)
Media Metrix Stockholders. Media Metrix' special stockholders meeting will
be held at the offices of Fried, Frank, Harris, Shriver & Jacobson, One New York
Plaza, 29th Floor, New York, New York 10004, at 9:00 a.m., local time, on [____
__, 2000]. You may vote at the Media Metrix special stockholders meeting if you
owned shares of Media Metrix common stock at the close of business on the record
date, which is [____ __], 2000.
In order for us to complete the merger, Media Metrix stockholders first,
must approve an amendment to Media Metrix' charter to increase the number of
shares of common stock Media Metrix is authorized to issue, and second, must
approve the issuance of shares of Media Metrix common stock in the merger. If
you do not vote your Media Metrix shares, the effect will be a vote against the
amendment to Media Metrix' charter. If the proposal to amend the charter is not
approved, the merger cannot proceed because Media Metrix does not presently have
enough shares available to issue in the merger.
Media Metrix stockholders are also being asked to approve an amendment to
Media Metrix' charter to change the company's name to Jupiter Media Metrix, Inc.
and amendments to two Media Metrix
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<PAGE> 16
employee stock plans to increase the number of shares of Media Metrix common
stock available for issuance under those plans. The amendments to the plans will
ensure that Media Metrix has enough shares available under the plans to
accommodate the increase in its employee base after the merger.
On [_______ __], 2000, Media Metrix directors and executive officers and
entities affiliated with them beneficially owned [ ] shares of Media Metrix
common stock, excluding [ ] shares which may be acquired upon exercise of
options. These shares represented approximately [___]% of the outstanding shares
of Media Metrix common stock on [____ __], 2000. Each of the directors and
executive officers of Media Metrix has indicated that he or she intends to vote,
and an affiliate of Media Metrix, whose 4,118,759 shares are included in the
[___] share number referred to above, has entered into a voting agreement
committing it to vote, in favor of each of the proposals to be voted on at the
Media Metrix special stockholders meeting.
Jupiter Stockholders. Jupiter's special stockholders meeting will be held
at [________________] at 9:00 a.m., local time, on [____ __, 2000]. You may vote
at the Jupiter special stockholders meeting if you owned shares of Jupiter
common stock at the close of business on the record date, which is [____ __],
2000. In order for us to complete the merger, Jupiter stockholders must vote to
adopt the merger agreement. If you do not vote your Jupiter shares, the effect
will be a vote against the adoption of the merger agreement.
On [_______ __], 2000, Jupiter directors and executive officers
beneficially owned [ ] shares of Jupiter common stock, excluding [ ] shares
which may be acquired upon exercise of options. These shares represented
approximately [___]% of the outstanding shares of Jupiter common stock on [____
__], 2000. Each of the directors and executive officers of Jupiter has indicated
that he or she intends to vote, and two of the directors of Jupiter (whose
3,379,736 shares are included in the [___] share number referred to above) have
signed voting agreements committing them to vote, for the adoption of the merger
agreement.
VOTING AGREEMENTS (SEE PAGE 79)
Three Jupiter stockholders, owning approximately 26% of the outstanding
Jupiter common stock, have entered into voting agreements with Media Metrix, and
four Media Metrix stockholders, owning approximately 36% of the outstanding
Media Metrix common stock, have entered into voting agreements with Jupiter,
that in each case commit those stockholders to vote all their shares in favor of
the proposals required to be approved to complete the merger.
WHAT STOCKHOLDERS WILL RECEIVE IN THE MERGER (SEE PAGE 69)
Media Metrix Stockholders. After the merger, you will continue to hold your
shares of Media Metrix common stock.
Jupiter Stockholders. If the merger is completed, you will receive 0.946 of
a share of Media Metrix common stock in exchange for each of your shares of
Jupiter common stock. This 0.946 exchange ratio will not change. Because the
market price of the Media Metrix common stock may change from day to day, you
cannot be sure of the market value of the Media Metrix common stock you will
receive in the merger at the time you vote your shares.
Immediately after the merger, former Jupiter stockholders will own
approximately 45%, and Media Metrix stockholders will own approximately 55%, of
Jupiter Media Metrix.
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<PAGE> 17
JUPITER STOCK OPTIONS (SEE PAGE 73)
In the merger, each option to purchase Jupiter common stock that is
outstanding immediately prior to the merger will become an option to purchase
the number of shares of Media Metrix common stock which is equal to the number
of shares of Jupiter common stock then issuable upon exercise of the option
multiplied by the 0.946 exchange ratio. The exercise price will equal the
exercise price then in effect divided by the exchange ratio, and the Media
Metrix option will otherwise have the same terms and conditions, including the
same schedule as to exercisability, as the Jupiter option.
ACCOUNTING TREATMENT OF THE MERGER (SEE PAGE 64)
The merger will be treated as a purchase for accounting purposes, which
means that the purchase price will be allocated by Media Metrix to Jupiter's
assets and liabilities based on the fair values of the assets acquired and the
liabilities assumed, and any excess of cost over the fair market value of the
net tangible assets of Jupiter acquired will be recorded on Jupiter Media
Metrix' books as goodwill and will be amortized under generally accepted
accounting principles.
TAX CONSEQUENCES OF THE MERGER (SEE PAGE 64)
We intend that the merger will qualify as a reorganization for United
States federal income tax purposes. Accordingly, Jupiter stockholders generally
will not recognize any gain or loss for United States federal income tax
purposes on the exchange of their Jupiter shares for shares of Media Metrix
common stock in the merger, except for any gain or loss recognized in connection
with the receipt of cash instead of a fractional share of Media Metrix common
stock. Media Metrix stockholders will not recognize taxable gain or loss for
United States federal income tax purposes in the merger.
Tax matters are very complicated, and the tax consequences of the merger to
each stockholder will depend on the facts of that stockholder's situation. You
are urged to consult your tax advisor for a full understanding of the tax
consequences of the merger to you.
NO APPRAISAL OR DISSENTERS' RIGHTS (SEE PAGE 42)
Under Delaware law, neither company's stockholders will have any appraisal
or dissenters' rights in connection with the merger.
INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS OF JUPITER IN THE MERGER (SEE PAGE
62)
When considering the recommendation of the Jupiter board of directors, you
should be aware that some of Jupiter's directors and executive officers have
interests in the merger that are different from, or in addition to, your
interests as stockholders.
- Following the merger, four of the directors of Jupiter will become
directors of Jupiter Media Metrix and three of the executive officers
of Jupiter will become executive officers of Jupiter Media Metrix.
- As part of the merger agreement, three senior executives of Jupiter
are entering into employment agreements with Jupiter that will only be
effective if the merger is completed.
- The shares underlying the options held by Jupiter's non-employee
directors are currently subject to a right of repurchase. This
repurchase right will lapse, and any unexercised options will become
fully vested, upon the merger.
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<PAGE> 18
- Under the existing terms of the Media Metrix 2000 Equity Incentive
Plan, the two non-employee Jupiter directors will each be granted an
option to purchase 15,000 shares of Media Metrix common stock upon
joining the Media Metrix board at the completion of the merger.
- For six years following the merger, Media Metrix will indemnify
Jupiter's directors and officers for acts and omissions occurring
prior to or at the merger and to use its reasonable best efforts to
maintain Jupiter's existing directors and officers liability insurance
coverage.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF JUPITER MEDIA METRIX AFTER THE
MERGER (SEE PAGE 66)
There currently are six members of the Media Metrix board of directors.
Upon completion of the merger, the number of directors on the board will be
increased to nine, of which five members will be designees of Media Metrix, and
four members will be designees of Jupiter. The five Media Metrix designees are
Stig Kry, who will serve until Jupiter Media Metrix' first annual stockholders
meeting after the merger, James Mortensen and William W. Helman, who will serve
until Jupiter Media Metrix' second annual stockholders meeting after the merger,
and Tod Johnson and Randy Pausch, who will serve until Jupiter Media Metrix'
third annual stockholders meeting after the merger. The four Jupiter designees
are Robert Kavner and Gene DeRose, who will serve until Jupiter Media Metrix'
first annual stockholders meeting after the merger, Jeffrey Ballowe, who will
serve until Jupiter Media Metrix' second annual stockholders meeting after the
merger, and Kurt Abrahamson, who will serve until Jupiter Media Metrix' third
annual stockholders meeting after the merger.
Following the merger:
- Tod Johnson, currently Chairman and Chief Executive Officer of Media
Metrix, will continue to serve as Chairman and Chief Executive Officer
of Jupiter Media Metrix;
- Gene DeRose, currently Chairman and Chief Executive Officer of
Jupiter, will become Vice Chairman and President of Jupiter Media
Metrix;
- Mary Ann Packo, currently President and Chief Operating Officer of
Media Metrix, will become Co-Chief Operating Officer of Jupiter Media
Metrix and will also continue as President of the Media Metrix
Division of Jupiter Media Metrix;
- Kurt Abrahamson, currently President and Chief Operating Officer of
Jupiter, will become Co-Chief Operating Officer of Jupiter Media
Metrix and will also continue as President of the Jupiter Division of
Jupiter Media Metrix;
- Thomas Lynch, currently Chief Financial Officer of Media Metrix, will
continue to serve as Chief Financial Officer of Jupiter Media Metrix;
and
- Jean Robinson, currently Chief Financial Officer of Jupiter, will
become Executive Vice President, Business Development, of Jupiter
Media Metrix.
REGULATORY APPROVALS REQUIRED FOR THE MERGER (SEE PAGE 65)
On July 17, 2000, we filed the information required by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 with the Antitrust Division
of the Department of Justice and the Federal Trade Commission. [On [____ __],
2000, the waiting period under the pre-merger notification requirements of the
federal antitrust laws expired]. [The companies were notified on [ ], 2000 that
early termination of the waiting period was granted.] The Antitrust Division of
the Department of Justice and the Federal Trade Commission have the authority to
challenge the merger on antitrust grounds at any time. We are not aware of any
other significant regulatory approvals required for the merger.
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<PAGE> 19
COMPLETION OF THE MERGER (SEE PAGE 75)
Before we can complete the merger, we must satisfy a number of conditions,
some of which are:
- approval of each of the stockholder proposals required to complete the
merger;
- the absence of any legal or regulatory prohibitions against the
merger;
- receipt by Media Metrix and Jupiter of opinions of tax counsel that
the merger will qualify as a reorganization for United States federal
income tax purposes; and
- material compliance by Media Metrix and Jupiter with their obligations
under the merger agreement.
We will merge shortly after all of the conditions to the merger have been
satisfied or waived. We anticipate completing the merger shortly after the two
stockholder meetings are held, assuming that the stockholders of both companies
approve the transaction.
TERMINATION OF THE MERGER AGREEMENT (SEE PAGE 76)
We may agree in writing to terminate the merger agreement at any time
without completing the merger, even after the stockholders of both companies
have approved it. In addition, the merger agreement may be terminated:
by either Media Metrix or Jupiter if:
- a court or other governmental agency issues a final order, decree or
ruling or if a law is enacted prohibiting the merger;
- the merger has not been completed by December 31, 2000;
- the stockholders of either company fail to approve the stockholder
proposal(s) on which they are voting; or
- the other company breaches its representations or obligations under
the merger agreement in a material manner and does not cure the breach
within 30 days after being notified of the breach;
by Media Metrix if:
- the board of directors of Jupiter does not recommend, or withdraws or
adversely modifies its recommendation, that the Jupiter stockholders
vote in favor of adoption of the merger agreement, or does not reject
any new proposal for a competing transaction involving Jupiter;
- the board of directors of Jupiter refuses to affirm its recommendation
of the merger to the Jupiter stockholders within five days of a
request from Media Metrix that it do so;
- Jupiter fails to hold the Jupiter special stockholders meeting when
scheduled; or
- the board of directors of Jupiter determines that a transaction other
than the merger would be more favorable to Jupiter and its
stockholders; and
by Jupiter if:
- the board of directors of Media Metrix does not recommend, or
withdraws or adversely modifies its recommendation, that the Media
Metrix stockholders vote in favor of the proposals required to
complete the merger, or does not reject any new proposal for a
competing transaction involving Media Metrix;
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<PAGE> 20
- the board of directors of Media Metrix refuses to affirm its
recommendation of the stockholder proposals to the Media Metrix
stockholders within five days of a request from Jupiter that it do so;
- Media Metrix fails to hold the Media Metrix special stockholders
meeting when scheduled; or
- the board of directors of Media Metrix determines that a transaction
other than the merger would be more favorable to Media Metrix and its
stockholders.
A TERMINATION FEE IS PAYABLE IF THE MERGER IS NOT COMPLETED (SEE PAGE 76)
If the merger is not completed because one of us exercised a right to
terminate the merger agreement, the merger agreement may require one of the
companies to pay to the other company a termination fee of $16 million. This fee
could discourage other companies from trying to acquire Jupiter or Media Metrix
before the merger, and acts as an additional incentive to both companies to
comply with the merger agreement.
RESTRICTIONS ON ALTERNATIVE TRANSACTIONS (SEE PAGE 72)
The merger agreement prohibits each company from soliciting, and restricts
each company from participating in discussions with third parties or taking
other actions related to, alternative transactions to the merger.
RESTRICTIONS ON THE ABILITY OF JUPITER AFFILIATES TO SELL MEDIA METRIX STOCK
(SEE PAGE 68)
All shares of Media Metrix common stock that Jupiter stockholders receive
in connection with the merger will be freely transferable unless the holder is
considered an "affiliate" of Jupiter for purposes of the federal securities
laws. Shares of Media Metrix common stock held by these affiliates may be sold
only pursuant to a registration statement or an exemption under the Securities
Act of 1933.
COMPARISON OF RIGHTS OF MEDIA METRIX STOCKHOLDERS AND JUPITER STOCKHOLDERS (SEE
PAGE 130)
After the merger, Jupiter stockholders will become stockholders of Media
Metrix, which will be renamed Jupiter Media Metrix, and their rights as
stockholders will be governed by the certificate of incorporation and bylaws of
Jupiter Media Metrix. There are some differences between the certificates of
incorporation and bylaws of Media Metrix and Jupiter. However, since Media
Metrix and Jupiter are both Delaware corporations, the rights of Jupiter
stockholders will continue to be governed by Delaware law after the merger.
COMPARATIVE MARKET DATA (SEE PAGE 100)
Both Media Metrix' and Jupiter's common stock currently trade on the
Nasdaq National Market. Media Metrix trades under the symbol "MMXI", and Jupiter
trades under the symbol "JPTR". The following table presents trading information
for Media Metrix common stock and Jupiter common stock on June 26, 2000 and
[____ __, 2000]. The table also presents the equivalent per share price of
Jupiter common stock, determined by multiplying the applicable price of Media
Metrix common stock by the 0.946 exchange ratio. June 26, 2000 was the last
trading day before our announcement of the signing of the merger agreement.
[____ __, 2000] was the last trading day before the date of this joint proxy
statement/prospectus.
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<PAGE> 21
<TABLE>
<CAPTION>
MEDIA METRIX COMMON STOCK
MEDIA METRIX JUPITER EQUIVALENT
COMMON STOCK COMMON STOCK (0.946:1)
------------------------ ------------------------ -------------------------
HIGH LOW CLOSING HIGH LOW CLOSING HIGH LOW CLOSING
---- --- ------- ---- --- ------- ---- --- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
June 26, 2000................... $29.75 $28.00 $28.25 $24.75 $22.75 $23.00 $28.14 $26.49 $26.72
[____ __, 2000]................. [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
</TABLE>
While the exchange ratio is fixed, the market prices of shares of Media
Metrix common stock and Jupiter common stock will fluctuate before the merger.
As a result, you should obtain current market quotations.
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<PAGE> 22
SUMMARY HISTORICAL AND UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
MEDIA METRIX SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The following table summarizes the statement of operations and balance
sheet data for Media Metrix' business and its predecessor businesses. For a more
detailed explanation of these financial data, please see Media Metrix' financial
statements incorporated by reference into this joint proxy statement/prospectus.
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION THREE
THROUGH MONTHS ENDED
DECEMBER 31, YEAR ENDED DECEMBER 31, MARCH 31,
------------ ------------------------------------ ----------------
1995 1996 1997 1998 1999 1999 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues .............................. $ -- $ 1,033 $ 3,188 $ 6,331 $ 20,500 $ 3,178 $ 10,204
Cost of revenues ...................... 140 1,744 3,463 4,121 10,291 1,720 4,411
-------- -------- -------- -------- -------- -------- --------
Gross profit (loss) ................... (140) (711) (275) 2,210 10,209 1,458 5,793
Operating Expenses:
Research and development ............ 86 588 866 1,382 5,044 681 2,916
Sales and marketing ................. 45 929 2,022 2,888 9,117 1,335 4,129
General and administrative .......... 101 1,148 1,516 2,715 6,756 1,049 3,089
Amortization of deferred
compensation and other
stock-based compensation ........ -- -- -- 369 1,060 108 282
Amortization of intangibles ......... -- -- -- 479 7,312 749 5,565
Acquired in-process research and
development ..................... -- -- -- 1,600 6,800 -- --
-------- -------- -------- -------- -------- -------- --------
Total operating expenses .............. 232 2,665 4,404 9,433 36,089 3,922 15,981
-------- -------- -------- -------- -------- -------- --------
Loss from operations .................. (372) (3,376) (4,679) (7,223) (25,880) (2,464) (10,188)
Minority interests .................... -- -- -- -- 1,689 -- 478
Interest and other income, net ........ -- -- 95 65 2,283 80 1,601
-------- -------- -------- -------- -------- -------- --------
Net loss .............................. (372) (3,376) (4,584) (7,158) (21,908) (2,384) (8,109)
Preferred stock dividends ............. -- -- (290) (314) (109) (82) --
-------- -------- -------- -------- -------- -------- --------
Net loss applicable to common
stockholders ...................... $ (372) $ (3,376) $ (4,874) $ (7,472) $(22,017) $ (2,466) $ (8,109)
======== ======== ======== ======== ======== ======== ========
Basic and diluted net loss per share
applicable to common stockholders . $ (0.06) $ (0.52) $ (0.75) $ (0.98) $ (1.34) $ (0.19) $ (0.41)
======== ======== ======== ======== ======== ======== ========
Shares used in the calculation
of basic and diluted net loss per
share applicable to common
stockholders ...................... 6,523 6,523 6,523 7,619 16,445 13,296 19,718
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31, AT MARCH 31,
------------------------------------------ ------------
1996 1997 1998 1999 2000
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA: (IN THOUSANDS) (UNAUDITED)
Cash, cash equivalents and
marketable securities ............ $ 683 $ 1,869 $ 8,012 $112,241 $101,758
Working capital (deficit) .......... (2,478) (47) 1,057 102,806 92,490
Total assets ....................... 1,213 2,787 16,060 178,844 175,802
Due to NPD ......................... 2,782 1,284 4,706 444 308
Preferred stock .................... -- 8,366 4,680 -- --
Total stockholders' equity (deficit) (2,478) (8,274) 2,622 162,789 156,857
</TABLE>
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<PAGE> 23
JUPITER SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The following table summarizes the statement of operations, operating
and balance sheet data for Jupiter's business. For a more detailed explanation
of these financial data, please see Jupiter's financial statements included in
this joint proxy statement/prospectus beginning at page F-1, and "Management's
Discussion and Analysis of Financial Condition and Results of Operations of
Jupiter" at page 121.
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------------------------- -----------------
1995 1996 1997 1998 1999 1999 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
DATA:
Revenues:
Research Services .................. $ 237 $ 566 $ 1,850 $ 6,183 $ 23,134 $ 3,447 $ 11,233
Conferences ........................ 2,024 2,686 3,426 4,890 11,270 1,724 5,118
Other .............................. 1,439 3,000 3,229 3,675 3,680 845 809
-------- -------- -------- -------- -------- -------- --------
Total revenues .................. 3,700 6,252 8,505 14,748 38,084 6,016 17,160
Cost of services and fulfillment ....... 2,893 4,687 6,259 9,676 16,898 2,955 6,665
-------- -------- -------- -------- -------- -------- --------
Gross profit .................... 807 1,565 2,246 5,072 21,186 3,061 10,495
Other operating expenses:
Sales and marketing ................ 254 514 1,558 3,173 11,384 1,750 5,209
General and administrative ......... 990 1,589 2,855 3,897 10,099 1,511 5,179
Depreciation and amortization ...... 35 75 100 193 1,278 124 881
-------- -------- -------- -------- -------- -------- --------
Total other operating expenses .. 1,279 2,178 4,513 7,263 22,761 3,385 11,269
-------- -------- -------- -------- -------- -------- --------
Interest income ........................ -- -- 17 54 743 3 909
Gain on sale of investments ............ -- -- -- -- -- -- 5,894
-------- -------- -------- -------- -------- -------- --------
Income (loss) before income taxes ...... (472) (613) (2,250) (2,137) (832) (321) 6,029
Income tax benefit (expense) ........... -- -- -- -- 202 -- (2,835)
-------- -------- -------- -------- -------- -------- --------
Net income (loss) ...................... $ (472) $ (613) $ (2,250) $ (2,137) $ (630) (321) 3,194
======== ======== ======== ======== ======== ======== ========
Pro forma basic net income (loss) per
common share (1) ..................... $ (0.21) $ (0.05) $ (0.03) $ .22
======= ======== ======== =======
Pro forma diluted net income (loss) per
common share (1) ..................... $ (0.21) $ (0.05) $ (0.03) $ .20
======= ======== ======== =======
Pro forma weighted average common shares
outstanding (1) ...................... 10,318 11,565 10,318 14,603
Pro forma diluted weighted average
common shares outstanding ............ 10,318 11,565 10,318 15,901
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------------------ ---------------
1995 1996 1997 1998 1999 1999 2000
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED CONSOLIDATED OPERATING DATA:
Number of Research Services contracts. 13 66 145 421 987 514 1,158
Total contract value (in thousands)... $ 315 $ 923 $ 2,509 $ 11,666 $ 40,081 $15,200 $50,500
Research Services deferred revenue (in
thousands).......................... $ 78 $ 313 $ 614 $ 5,639 $ 21,908 $ 6,600 $26,700
Number of employees................... 18 61 88 142 270 167 354
Number of conferences................. 6 7 8 9 10 1 4
</TABLE>
(1) Pro forma basic and diluted net loss per common share is computed by
dividing net loss by the pro forma weighted average number of shares of
common stock. Pro forma weighted average number of shares of common
stock gives effect to Jupiter's reorganization from an LLC to a
corporation as though the reorganization had occurred as of January 1,
1998. Pro forma weighted average shares do not include any common stock
equivalent, for any periods, except the three months ended March 31,
2000, because inclusion of common stock equivalents would have been
anti-dilutive.
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<PAGE> 24
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------------------ ---------
1995 1996 1997 1998 1999 2000
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents..... $ 4 $ 8 $ 1,614 $ 216 $57,222 $48,930
Working capital .............. (572) (1,166) (553) (3,376) 55,029 50,822
Total assets.................. 907 1,474 3,463 6,867 97,180 129,292
Convertible notes payable..... -- -- -- -- 3,500 --
Stockholders' equity/members
deficiency................. (405) (714) 9 (2,129) 61,498 83,879
</TABLE>
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<PAGE> 25
UNAUDITED PRO FORMA COMBINING SUMMARY FINANCIAL INFORMATION
The pro forma income statement data for the year ended December 31,
1999 gives effect to the merger as if it occurred on January 1, 1999. The pro
forma income statement data for the three months ended March 31, 2000 gives
effect to the merger as if it occurred on January 1, 2000. The pro forma balance
sheet data as of March 31, 2000 gives effect to the merger as if it occurred on
that date.
We have included this unaudited pro forma condensed summary financial
information only for the purposes of illustration, and it does not necessarily
indicate what the operating results or financial position would have been if the
merger between Media Metrix and Jupiter had been completed at the dates
indicated. Moreover, this information does not necessarily indicate what the
future operating results or financial position of the combined companies will
be. You should read this unaudited pro forma summary financial information in
conjunction with the "Unaudited Pro Forma Condensed Combining Financial
Information" included in this joint proxy statement/prospectus at page 90.
<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA THREE
YEAR ENDED MONTHS ENDED
DECEMBER 31, MARCH 31,
------------ ------------
1999 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues ............................ $ 65,382 $ 30,158
Cost of revenues .................... 31,877 12,774
--------- ---------
Gross profit ........................ 33,505 17,384
Operating Expenses:
Research and development .......... 5,862 2,916
Sales and marketing ............... 20,725 9,356
General and administrative ........ 20,058 9,594
Amortization of deferred
compensation and other
stock-based compensation ....... 11,290 3,801
Amortization of intangibles ....... 101,029 25,882
Acquired in-process research and
development .................... 6,800 --
--------- ---------
Total operating expenses ............ 165,764 51,549
--------- ---------
Loss from operations ................ (132,259) (34,165)
Minority interests .................. 1,689 478
Interest and other income, net ...... 1,380 2,105
Gain on sale of investments ......... -- 5,894
--------- ---------
Net loss before income taxes ........ (129,190) (25,688)
Income tax benefit .................. -- 1,000
--------- ---------
Net loss ............................ (129,190) (24,688)
Preferred stock dividends ........... (109) --
--------- ---------
Net loss applicable to common
stockholders .................... (129,299) (24,688)
========= =========
Basic and diluted net loss per
share applicable to
common stockholders ............. $ (4.08) $ (0.72)
========= =========
Shares used in the calculation
of basic and diluted net loss per
share applicable to common
stockholders .................... 31,683 34,428
========= =========
</TABLE>
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<TABLE>
<CAPTION>
PRO FORMA AT
MARCH 31,
--------------
2000
(IN THOUSANDS)
<S> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and
marketable securities.............. $ 138,575
Working capital...................... 108,051
Total assets......................... 669,934
Total stockholders' equity........... 602,962
</TABLE>
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<PAGE> 27
COMPARATIVE PER SHARE DATA
Set forth below are the earnings (loss) before extraordinary items and book
value (common stockholders' equity) per common share data separately for Media
Metrix on a historical basis, for the combined enterprise on a pro forma
combined basis, for Jupiter on a historical basis and for the combined
enterprise on a pro forma combined basis per Jupiter equivalent share. The
exchange ratio for the merger is 0.946 of a share of Media Metrix common stock
for each share of Jupiter common stock, as set forth in the merger agreement.
Neither Media Metrix nor Jupiter has declared or paid any cash dividends on its
common stock, and Media Metrix does not anticipate doing so in the foreseeable
future.
The unaudited pro forma combined data below is for illustrative purposes
only. The companies may have performed differently had they always been
combined. You should not rely on this information as being indicative of the
historical results that would have been achieved had the companies always been
combined or the future results that the combined enterprise will experience
after the merger.
You should read the information below together with our respective
historical financial statements and related notes contained in the annual
reports and information which, in the case of Media Metrix, have been filed with
the SEC and are incorporated into this joint proxy statement/prospectus by
reference and, which, in the case of Jupiter, which is not permitted to
incorporate by reference, may be found in this joint proxy statement/prospectus
beginning on page F-1. To obtain copies of Media Metrix' documents, please see
"Where You Can Find More Information" on page 133.
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
1999 2000
------------ ------------------
<S> <C> <C>
MEDIA METRIX HISTORICAL PER COMMON SHARE DATA:
Net loss applicable to common stockholders - basic ............... $ (1.34) $ (.41)
Net loss applicable to common stockholders - diluted ............. $ (1.34) $ (.41)
Book value ....................................................... $ 8.27 $ 7.92
JUPITER HISTORICAL PER COMMON SHARE DATA:
Net income (loss) - basic ........................................ $ (.05) $ .22
Net income (loss) - diluted ..................................... $ (.05) $ .20
Book value ....................................................... $ 4.24 $ 5.56
JUPITER MEDIA METRIX UNAUDITED PRO FORMA COMBINED PER MEDIA METRIX
COMMON SHARE DATA:
Net loss applicable to common stockholders - basic ............... $ (4.08) $ (0.72)
Net loss applicable to common stockholders - diluted ............. $ (4.08) $ (0.72)
Book value ....................................................... -- $ 17.47
JUPITER MEDIA METRIX UNAUDITED PRO FORMA COMBINED PER JUPITER
EQUIVALENT COMMON SHARE DATA:
Net loss applicable to common stockholders - basic ............... $ (3.86) $ (0.68)
Net loss applicable to common stockholders - diluted ............. $ (3.86) $ (0.68)
Book value ....................................................... -- $ 16.53
</TABLE>
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<PAGE> 28
RISK FACTORS
In addition to the other information included and incorporated by reference
in this joint proxy statement/prospectus, you should carefully read and consider
the following factors in evaluating the proposals to be voted on at the special
stockholders meetings.
RISKS RELATING TO THE MERGER TRANSACTION
JUPITER STOCKHOLDERS WILL RECEIVE A FIXED NUMBER OF SHARES OF MEDIA METRIX
COMMON STOCK, DESPITE CHANGES IN THE MARKET VALUE OF JUPITER OR MEDIA METRIX
COMMON STOCK BETWEEN NOW AND THE MERGER.
Upon completion of the merger, each share of Jupiter common stock will be
exchanged for 0.946 of a share of Media Metrix common stock. The ratio at which
the shares will be converted is fixed, and there will be no adjustment for
changes in the market price of either Media Metrix or Jupiter common stock. Any
change in the price of either Media Metrix common stock or Jupiter common stock
will affect the value Jupiter stockholders will receive in the merger for their
shares. Media Metrix common stock has historically experienced significant
volatility, and the value of the shares of Media Metrix stock received in the
merger may go up or down as the market price of Media Metrix stock or Jupiter
common stock goes up or down between now and the time of the merger. Neither
company is permitted to terminate the merger agreement or resolicit the vote of
its stockholders solely because of changes in the market price of either
company's common stock.
OUR COSTS RELATED TO THE MERGER MAY BE SIGNIFICANT.
We expect to incur merger-related expenses of approximately $15 million
through the quarter in which the merger occurs. These expenses include legal,
financial advisory and accounting fees for both companies, regulatory filing
fees, costs of financial printing and listing fees. In addition, Jupiter Media
Metrix will recognize deferred compensation estimated to be approximately $22
million upon completion of the merger relating to the acquisition of unvested
stock options in the merger and such costs will be amortized over the remaining
vesting period of up to four years. This estimate does not include any costs
associated with restructuring, integrating or consolidating the operations of
the two companies. This amount is only an estimate and may change. In addition,
we may incur unanticipated expenses in integrating the businesses of Jupiter and
Media Metrix. We expect that the savings from the elimination of duplicative
expenses and the realization of other efficiencies related to the integration of
the businesses of Jupiter and Media Metrix may offset any additional expenses in
the future. However, we may not be able to achieve a net benefit in the near
future, or at all. Moreover, combining our businesses, even if achieved in an
efficient and effective manner, may not result in combined financial results
that are better than those which Media Metrix and Jupiter would have
accomplished independently.
DIRECTORS OF JUPITER HAVE POTENTIAL CONFLICTS OF INTEREST THAT MAY INFLUENCE
THEM IN RECOMMENDING THAT JUPITER STOCKHOLDERS VOTE IN FAVOR OF ADOPTION OF THE
MERGER AGREEMENT.
Certain of the directors of Jupiter who recommended that Jupiter
stockholders vote in favor of the adoption of the merger agreement have
employment or other benefit arrangements that provide them with interests in the
merger that differ from yours.
- Following completion of the merger, Robert Kavner and Jeffrey Ballowe, who
are presently directors of Jupiter, will serve on the board of Jupiter
Media Metrix. Gene DeRose, Chairman and Chief Executive Officer of Jupiter,
will serve as Vice Chairman and President of Jupiter Media Metrix, and Kurt
Abrahamson, a director and President and Chief Operating Officer of
Jupiter, will serve as a
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<PAGE> 29
director and Co-Chief Operating Officer of Jupiter Media Metrix, as well as
President of the Jupiter Communications division of Jupiter Media Metrix.
- Gene DeRose and Kurt Abrahamson have entered into employment agreements
with Jupiter which will take effect only if the merger is completed.
- The Jupiter stock options that are held by Jupiter's non-employee directors
are currently exercisable, but any shares acquired upon exercise of the
option are subject to a right of repurchase in favor of Jupiter if the
director no longer serves on the Jupiter board. Upon completion of the
merger, this right of repurchase will lapse, and any unexercised options
will become fully vested.
- Under the existing terms of the Media Metrix 2000 Equity Incentive Plan,
the two non-employee Jupiter directors will each be granted an option to
purchase 15,000 shares of Media Metrix common stock upon joining the Media
Metrix board at the completion of the merger.
The receipt of compensation or other benefits in the merger, and the
continuation of indemnification arrangements for current directors of Jupiter
following completion of the merger, may have influenced these directors in
making their recommendation that Jupiter stockholders vote in favor of the
adoption of the merger agreement.
FAILURE TO COMPLETE THE MERGER COULD NEGATIVELY IMPACT JUPITER'S OR MEDIA
METRIX' STOCK PRICE AND FUTURE BUSINESS AND OPERATIONS.
If the merger is not completed for any reason, each company may be subject
to the following risks:
- it may be required to pay the other party a termination fee of $16 million,
depending on the reason why the merger was not completed;
- in the case of Jupiter, the price of its common stock may decline to the
extent that the current market price of Jupiter's common stock reflects a
market assumption that the merger will be completed; and
- various costs related to the merger, such as legal and accounting fees and
the expenses and fairness opinion fee of its financial advisor, must be
paid even if the merger is not completed.
Further, if the merger is terminated and either company's board of
directors determines to seek another merger or business combination, Jupiter may
not be able to find a partner willing to pay an equivalent or more attractive
price than the price to be paid in the merger. If the merger is terminated and
Media Metrix' board of directors determines to seek another merger or business
combination, Media Metrix may not be able to find a business opportunity as
attractive as is presented by the merger. In addition, while the merger
agreement is in effect, each company is prohibited from soliciting, initiating
or knowingly encouraging, including entering into or taking various other
actions with respect to, any extraordinary transaction, such as a merger, sale
of assets or other business combination, with any party other than the other
party to the merger agreement.
RISKS RELATING TO THE COMBINED ENTERPRISE
JUPITER MEDIA METRIX MAY FAIL TO REALIZE THE ANTICIPATED BENEFITS OF THE MERGER.
The success of the merger will depend, in part, on the ability of Jupiter
Media Metrix to realize the anticipated growth opportunities and synergies from
combining the businesses of Media Metrix with the businesses of Jupiter. For
Jupiter Media Metrix to realize the anticipated benefits of this combination,
members of its management team must develop strategies and implement a business
plan that will:
- Effectively leverage the anticipated synergies between Media Metrix'
audience and advertising measurement services, technology and
infrastructure and Jupiter's analysis, forecasts, surveys and conferences
businesses;
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<PAGE> 30
- Successfully use the anticipated opportunities for cross-promotion and
sales of the products and services of Media Metrix and Jupiter;
- Successfully increase revenues from new products and services;
- Effectively and efficiently integrate the policies, procedures and
operations of Media Metrix and Jupiter;
- Successfully retain and attract key employees of the combined enterprise,
including operating management and sales forces, during a period of
transition and in light of the competitive employment market; and
- While integrating the combined enterprise's operations, maintain adequate
focus on the core businesses of Jupiter Media Metrix in order to take
advantage of competitive opportunities and to respond to competitive
challenges.
If members of the management team of Jupiter Media Metrix are not able to
develop strategies and implement a business plan that achieves these objectives,
the anticipated benefits of the merger may not be realized. In particular,
anticipated growth in revenue, earnings before interest, taxes and depreciation
and amortization, or "EBITDA," and cash flow may not be realized, which would
have an adverse impact on Jupiter Media Metrix and the market price of shares of
Jupiter Media Metrix common stock.
THE RISKS ASSOCIATED WITH THE COMBINED ENTERPRISE WILL BE GREATER IN NUMBER THAN
THOSE ASSOCIATED WITH EACH COMPANY INDIVIDUALLY, AND SOME OF THESE RISKS MAY BE
EXACERBATED BY THE COMBINATION OF THE TWO COMPANIES.
Media Metrix and Jupiter each face a number of risks which are discussed
below under the captions "Risks Relating to Media Metrix" and "Risks Relating to
Jupiter," respectively. Some of these risks are common to both companies, but
some are specific to each particular company. The risks associated with the
combined enterprise will therefore be greater in number than those associated
with each company individually. Jupiter Media Metrix may not be successful in
addressing these risks, and some of these risks may be exacerbated by reason of
the merger.
RISKS RELATING TO MEDIA METRIX
THERE IS LIMITED INFORMATION UPON WHICH YOU CAN EVALUATE MEDIA METRIX' BUSINESS.
Media Metrix has been in operation only since 1996 as an entity independent
from The NPD Group, Inc. As a result, Media Metrix has a limited operating
history upon which you can evaluate its business and the products and services
offered by it. Due to Media Metrix' limited operating history, any evaluation of
its business and prospects must be made in light of the risks and uncertainties
frequently encountered by companies in new and rapidly evolving markets such as
those in which Media Metrix operates. These risks and uncertainties are
discussed elsewhere in this section. Media Metrix may not be successful in
addressing these risks and uncertainties.
MEDIA METRIX HAS A HISTORY OF OPERATING LOSSES WHICH MAY CONTINUE FOR THE
FORESEEABLE FUTURE.
Media Metrix has incurred substantial costs to create, market and
distribute its products and services, including costs associated with the
development of its technology, to retain qualified personnel, including
management, research analysts, sales representatives and technical personnel,
and to grow its business. As a result, Media Metrix incurred net losses of
approximately $8.1 million in the first quarter of 2000, $21.9 million in 1999
and $7.2 million in 1998.
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<PAGE> 31
Media Metrix intends to invest heavily in its technologies, new products
and services and international expansion. As a result, Media Metrix will need to
achieve significant revenue increases to achieve and maintain profitability.
Although Media Metrix revenues and the number of its clients have continued to
increase, Media Metrix may not be able to continue to grow and to expand its
business. The number of clients or the number of products and services for which
Media Metrix' clients subscribe may grow more slowly than Media Metrix
anticipates or may decrease in the future. Even if Media Metrix becomes
profitable, Media Metrix may not sustain or increase its profits on a quarterly
or annual basis in the future.
MEDIA METRIX' OPERATING RESULTS MAY FLUCTUATE FROM QUARTER TO QUARTER.
Media Metrix' operating results have varied from quarter to quarter. Media
Metrix' operating results may continue to vary as a result of a variety of
factors. These factors include:
- its ability to retain its current clients;
- its ability to sell additional products and services to current clients;
- its ability to attract new clients;
- the announcement or introduction of new products and services by Media
Metrix or its competitors;
- price competition;
- its ability to upgrade and to develop its systems and infrastructure to
accommodate its growth;
- its ability to attract new personnel;
- the timing, cost and availability of advertising in traditional media;
- the impact of possible acquisitions both on Media Metrix' operations and on
its reported operating results due to associated accounting charges;
- technical difficulties or service interruptions;
- the amount and timing of costs relating to changes in the size or
composition of its panel; and
- the amount and timing of operating costs and capital expenditures relating
to expansion of its business, including its planned international
expansion.
Many of these factors are beyond Media Metrix' control. Media Metrix'
revenues may not increase in proportion to the increase in advertising on the
Internet, or at all. In addition, advertising on the Internet may not continue
to grow at forecasted levels, or at all. A substantial portion of its current
and future costs are fixed. If its revenues fall short of expectations, Media
Metrix may not be able to adjust its fixed expenses to compensate for this
shortfall on a timely basis. Further, as a strategy for remaining competitive,
Media Metrix may have to make certain pricing, service or marketing decisions
that could have a material adverse effect on its business and financial results.
Due to these factors, period-to-period comparisons of Media Metrix'
revenues and operating results are not necessarily meaningful. Therefore, you
should not rely on these comparisons as indicators of its future performance.
Media Metrix also cannot assure you that it will be able to:
- sustain the rates of revenue growth Media Metrix has experienced in the
past;
- improve its operating results; or
- achieve consistent profitability.
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<PAGE> 32
In addition, Media Metrix' operating results in future periods may be below
the expectations of securities analysts and investors. If that occurs, the
market price of its common stock could be materially and adversely affected.
MEDIA METRIX MAY NOT BE ABLE TO EFFECTIVELY MANAGE ITS INTERNAL GROWTH.
Media Metrix is currently experiencing a period of rapid expansion. Media
Metrix anticipates that future expansion will be necessary in order to
accommodate its needs and to take advantage of new opportunities in the market
for audience measurement services on the Internet. In order to succeed, Media
Metrix will need to attract and hire additional sales, technical and management
personnel. As a result, Media Metrix expects to add key personnel in the near
future to manage its expected growth. Media Metrix also will need to expand its
technical, finance, administrative and operations staff. Media Metrix' current
and planned personnel, systems, procedures and controls may not be adequate to
support its future operations. Media Metrix may not be able to hire new and
retain its current personnel. Media Metrix also may not be able to exploit
existing and potential strategic relationships and market opportunities.
THE MARKET FOR INTERNET AUDIENCE MEASUREMENT SERVICES IS HIGHLY COMPETITIVE.
The market for Internet audience measurement services is new and rapidly
evolving. Media Metrix expects competition in this market to intensify in the
future. In March 1999, NetRatings and Nielsen Media Research introduced a new
Web site ratings service, Nielsen//NetRatings, that competes directly with many
aspects of Media Metrix' services. Nielsen Media Research is the leading
provider of television audience measurement services in the United States and
Canada. In September 1999, NetRatings also entered into a joint venture with
ACNielsen Corp. to develop and maintain audience measurement panels and to
market Nielsen//NetRatings' products and services in international markets.
ACNielsen is a leading provider of market research, information and analysis to
consumer products and services industries and is a provider of television
audience measurement services outside the United States and Canada. Both Nielsen
Media Research and ACNielsen have significantly more financial and other
resources than Media Metrix, and Nielsen//NetRatings has become a significant
competitor. Media Metrix also faces competition internationally from NetValue, a
French company which has begun providing audience measurement services in Europe
and has announced that it will soon begin providing these services in the United
States.
Media Metrix competes indirectly with operators of site-centric and other
consumer-centric measurement systems. Site-centric measurement systems measure
audience visits at a specific Web site by monitoring the Web site's server.
Consumer-centric systems measure the market either in a manner similar to Media
Metrix or qualitatively through online and telephonic interviews.
In addition, Media Metrix may face competition from individual Web sites
that develop an independent method of measuring their own audience or from other
companies that develop alternative audience measurement technologies to those
already provided by it.
Media Metrix believes that the principal competitive factors in its market
are:
- creating representative consumer and business panels;
- providing audience measurement services for the entire Internet, including
the Web and proprietary online services; and
- offering products and services that meet the changing needs of its
customers.
Some of its competitors have:
- longer operating histories;
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<PAGE> 33
- larger customer bases;
- greater brand recognition in similar businesses; and
- significantly greater financial, marketing, technical and other resources.
In addition, some of Media Metrix' competitors may be able to:
- devote greater resources to marketing and promotional campaigns;
- adopt more aggressive pricing policies; and
- devote substantially more resources to technology and systems development.
Increased competition may result in reduced operating margins, loss of
market share and diminished value in Media Metrix' services, as well as
different pricing, service or marketing decisions. Media Metrix may not be able
to compete successfully against current and future competitors.
MEDIA METRIX FACES MANY CHALLENGES IN CONNECTION WITH ITS PLANNED INTERNATIONAL
EXPANSION.
Media Metrix' current strategy includes further expansion of its services
to measure Internet audiences outside of the United States. Media Metrix'
expansion into international markets requires management attention and
resources. The international markets for audience measurement services have
historically been extremely localized and difficult to penetrate. The costs of
establishing and maintaining panels in foreign countries has been and will
continue to be substantial. Media Metrix may not be able to successfully develop
or market new products and services based on data obtained in those markets. In
addition, Media Metrix' international operations will be subject to a number of
inherent risks, including:
- recessions in economies outside the United States;
- changes in regulatory requirements;
- weaker protection for intellectual property rights in some countries;
- potentially adverse tax consequences;
- economic and political instability; and
- fluctuations in currency exchange rates.
MEDIA METRIX WILL DEPEND ON STRATEGIC RELATIONSHIPS IN INTERNATIONAL MARKETS.
The success of Media Metrix' international expansion will depend on its
ability to:
- recruit and maintain at-home and at-work panels that are representative of
a geographic area;
- control costs and effectively manage foreign operations; and
- effectively market and sell any new products or services.
These challenges require skills and expertise in foreign countries that
Media Metrix is currently developing. Media Metrix believes that its success in
penetrating markets outside of the United States will depend on its ability to
continue to address, develop and maintain strategic relationships with local
audience measurement or marketing research companies. This may become
increasingly difficult as competition in the international markets increases.
MEDIA METRIX DEPENDS ON CONTINUED GROWTH IN USE OF THE INTERNET.
Media Metrix' business would be adversely affected if Internet usage for
the exchange of information and for commerce does not continue to grow rapidly.
Internet usage may be inhibited for a number of reasons, including:
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<PAGE> 34
- inadequate network infrastructure;
- unwillingness of companies and consumers to shift their purchasing from
traditional vendors to online vendors;
- security and authentication concerns with respect to the transmission of
confidential information, such as credit card numbers, over the Internet;
- privacy concerns;
- inconsistent quality of service; or
- lack of availability of cost-effective, high-speed service.
Even if Internet usage grows, the Internet infrastructure may not be able
to support the demands placed on it by this growth. As a result, its performance
and reliability may decline. In addition, Web sites and proprietary online
services have experienced interruptions in their service as a result of outages
and other delays occurring throughout their infrastructure. If these outages or
delays frequently occur in the future, Internet usage as a medium for the
exchange of information and for commerce could grow more slowly or decline.
MEDIA METRIX' MARKET IS SUBJECT TO RAPID CHANGE.
Media Metrix' market is characterized by:
- rapidly changing technology;
- evolving industry standards;
- introductions and enhancements of competitive products and services; and
- changing customer demands.
Accordingly, Media Metrix' future success depends on its ability to:
- adapt to rapidly changing technologies;
- adapt its services to evolving industry standards; and
- improve the features, reliability and timeliness of its product and service
offerings in response to competitive product and service offerings and
evolving demands of the marketplace.
Media Metrix may not succeed in addressing these issues. In addition, the
widespread adoption of new Internet networking technologies or other
technological changes could require Media Metrix to expend substantial amounts
of capital to change its services or infrastructure. These changes may also
involve new technologies that may not be measurable by Media Metrix' current
methods.
MEDIA METRIX DEPENDS ON RENEWALS OF ITS SUBSCRIPTION BASED SERVICES.
Media Metrix' business and financial results are dependent on its ability
to attract and retain clients subscribing for its syndicated audience
measurement products. In addition, Media Metrix' business model assumes that
Media Metrix will be able to increase the level of sales over time to its
existing clients. To date, high renewal rates have formed a foundation for its
revenue growth. However, Media Metrix may not continue to experience high
renewal rates. Media Metrix' subscription renewal rates may also decline as a
result of a consolidation in its customer base or if a significant number of its
customers cease operations.
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<PAGE> 35
THE ACCEPTANCE AND EFFECTIVENESS OF INTERNET ADVERTISING IS UNPROVEN.
Media Metrix' future success will depend in part on an increase in the use
of the Internet as an advertising medium, and there is a risk that the market
for Internet advertising fails to develop or develops more slowly than Media
Metrix expects. The Internet advertising market is new and rapidly evolving. It
cannot yet be compared with the traditional advertising market to gauge its
effectiveness. As a result, there is significant uncertainty about the demand
and market acceptance for Internet advertising. Many of its current or potential
customers have little or no experience using the Internet for advertising
purposes. The adoption of Internet advertising, particularly by entities that
have historically relied on traditional media for advertising, requires the
acceptance of a new way of conducting business. These companies may find
Internet advertising to be less effective for promoting their products and
services as compared to traditional advertising. In addition, most current and
potential Web publisher customers have little or no experience in generating
revenues from the sale of advertising space on their Web sites. The market for
Internet advertising may not continue to emerge and may not become sustainable.
MEDIA METRIX MUST FURTHER DEVELOP ITS BRAND NAMES.
Media Metrix believes that maintaining and strengthening the Media Metrix
brand is an important aspect of its business. The Media Metrix brand name is
critical to Media Metrix' efforts to attract clients. Media Metrix believes that
the importance of brand recognition will increase due to the increasing number
of competitors entering the market for Internet audience measurement and
research. Media Metrix' ability to promote and position its brands depends
largely on:
- the success of its marketing efforts;
- its ability to provide its customers with high quality products; and
- its ability to secure rights to its brand names in the major markets in
which Media Metrix will be active.
To promote the Media Metrix brand in response to competitive pressures,
Media Metrix may find it necessary to increase its marketing budget or otherwise
increase its financial commitment to creating and maintaining brand loyalty
among its clients. Media Metrix' use of the brand name "Media Metrix" in Europe
has been challenged by Mediametrie, S.A., a French company which measures
audiences of various media. Rather than engage in a protracted dispute, Media
Metrix has elected to have its European joint venture conduct business under the
name "MMXI Europe." Mediametrie has also challenged its use of the domain name
"mediametrix.com." If Media Metrix fails to promote and maintain its brands, or
incurs excessive expenses attempting to promote and maintain its brand, its
business and financial results could be materially adversely affected.
THE INTERNET AUDIENCE MEASUREMENT INDUSTRY IS NEW AND RAPIDLY EVOLVING.
To date, no Internet audience measurement service has been adopted as the
universally accepted standard. Media Metrix' existing and potential customers
may challenge or refuse to accept its audience measurement reports. Media
Metrix' customers may be dissatisfied with its methodology for measuring
Internet audiences or may feel that its panel is not representative of Internet
users. Furthermore, another Internet audience measurement service may be adopted
as the industry standard. As a result, Media Metrix' customers may turn to
alternative services provided by current or potential competitors.
MEDIA METRIX' COSTS MAY INCREASE IF THE SIZE OR COMPOSITION OF ITS PANEL
CHANGES.
A significant portion of Media Metrix' costs consists of the expense of
recruiting and maintaining its panel and collecting and processing data
generated by the panel. Media Metrix may, in the future, need to change the size
or composition of its panel. As a result, its expenses for recruiting and
maintaining its panel may increase. Media Metrix' international expansion will
also increase its panel related costs.
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<PAGE> 36
MEDIA METRIX MAY ENCOUNTER RISKS ASSOCIATED WITH NEW PRODUCT DEVELOPMENT.
Media Metrix' future success depends in part on Media Metrix' ability to
offer new products and services on a timely and cost-effective basis. In order
to gain market acceptance, its new products and services must address:
- specific industries and businesses; and
- changes in technologies.
The process of developing and launching new products or services is
inherently risky and costly. Moreover, Media Metrix' products and services, once
launched, may not be accepted by its customers.
MEDIA METRIX' SYSTEMS MAY FAIL.
Media Metrix' success depends on the efficient and uninterrupted operation
of its computer and communications systems. Media Metrix maintains a network to
process data received from panelists. As needed in the course of its
international expansion, Media Metrix also utilizes some servers and
minicomputers provided to it by The NPD Group, Inc., the company of which Media
Metrix was a part until 1996, under a management services agreement. Any failure
of Media Metrix' network could impede the processing of data, customer orders
and day-to-day management of its business.
Media Metrix' systems and operations are vulnerable to damage or
interruption from:
- telecommunication failures;
- power loss;
- fires;
- floods;
- physical and electronic break-ins;
- sabotage; and
- intentional acts of vandalism and similar events.
Media Metrix does not presently have fully redundant systems. Despite any
precautions Media Metrix takes, a natural disaster or other unanticipated
problems which lead to the corruption or loss of data at the NPD facility or the
Media Metrix facilities could result in interruptions in the services Media
Metrix provides. In addition, Media Metrix' databases are growing rapidly, and
the systems currently in place may not be sufficient to handle any further
expansion. This could lead to systems failure or to a corruption of Media
Metrix' data.
MEDIA METRIX MAY SUFFER AN INTERRUPTION IN ITS BUSINESS.
Media Metrix' business interruption insurance may not be adequate to
compensate Media Metrix fully for losses that may occur as a result of an
interruption in its business. Media Metrix' business and financial results could
be materially and adversely affected if Media Metrix is unable to conduct its
business for an extended period of time for any reason.
MEDIA METRIX DEPENDS ON ITS KEY PERSONNEL.
Media Metrix' future success depends on the continued services of its
senior management and other key employees, in particular the services of Tod
Johnson, its Chairman and Chief Executive Officer, and Mary Ann Packo, its
President and Chief Operating Officer. Mr. Johnson also serves as the Chief
Executive Officer of NPD. Mr. Johnson has spent a substantial portion of his
time on Media Metrix matters and Media Metrix anticipates that he will continue
to do so. However, he will not be able to
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devote all of his time to Media Metrix' affairs. Mr. Johnson's other
responsibilities could divert his attention from Media Metrix' affairs. Media
Metrix' performance depends on its ability to retain and to motivate its key
employees. Media Metrix does not have long-term employment agreements with any
of its key personnel and Media Metrix does not maintain any "key person" life
insurance policies.
MEDIA METRIX MAY FAIL TO INTEGRATE ACQUISITIONS.
If appropriate opportunities present themselves, Media Metrix intends to
acquire other complementary businesses, technologies, services or products.
Media Metrix currently has no agreements, other than the merger agreement, to
make any acquisitions, although Media Metrix continually evaluates acquisition
opportunities that come to its attention. Media Metrix may not be able to
complete future acquisitions successfully or to integrate an acquired entity
with its current business. An acquisition may result in unforeseen operating
difficulties and expenditures, and the anticipated benefits of the acquisition
may not be realized. Acquisitions may also require significant management
attention that would otherwise be available for ongoing development of its
business.
In connection with any acquisition, Media Metrix may:
- issue additional equity securities which would dilute stockholder's
interest in the company;
- incur debt;
- incur contingent liabilities; and
- incur amortization expenses related to goodwill and other intangible
assets.
MEDIA METRIX MAY NOT BE ABLE TO PROTECT AND ENFORCE ITS INTELLECTUAL PROPERTY
RIGHTS.
Media Metrix regards the protection of its patents, copyrights, service
marks, trademarks and trade secrets as important to its future success. Media
Metrix relies on a combination of patent, copyright, trademark, service mark and
trade secret laws and contractual restrictions to establish and protect its
proprietary rights. Media Metrix has entered into confidentiality and invention
assignment agreements with its employees and contractors, and nondisclosure
agreements with parties Media Metrix does business with, in order to limit
access to and disclosure of its proprietary information. However, these
contractual arrangements or the other steps Media Metrix has taken may not be
sufficient to protect Media Metrix' intellectual property from infringement or
misappropriation. Moreover, others may independently develop similar or superior
technologies.
Media Metrix seeks to obtain the issuance of patents and the registration
of its trademarks and service marks in the United States and in selected other
countries. However, patents or trademark registrations may not be issued to
Media Metrix with respect to pending or future applications, and Media Metrix'
patents and trademarks may not be upheld as valid. Effective patent, trademark,
service mark, copyright and trade secret protection may not be available in
every country in which Media Metrix' services are offered.
Third parties may claim that Media Metrix' technologies infringe upon their
proprietary rights. Media Metrix expects that the number of infringement claims
in its market will increase as the number of services and competitors in its
industry grows. These claims, whether meritorious or not, could:
- be time-consuming;
- result in costly litigation; and
- require Media Metrix to enter into royalty or licensing agreements.
Royalty or licensing agreements might not be available on terms Media
Metrix finds acceptable or at all.
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Media Metrix' use of the brand name "Media Metrix" in Europe has been
challenged by Mediametrie, S.A., a French company which measures audiences of
various media. Rather than engage in a protracted dispute, Media Metrix has
elected to have its European joint venture conduct business under the name "MMXI
Europe. " Mediametrie has also challenged its use of the domain name
"mediametrix.com." Media Metrix cannot be sure that Media Metrix will not
continue to have disputes with Mediametrie, S.A. or others regarding the use of
its name internationally. Media Metrix may not be successful in reaching a
settlement on terms acceptable to Media Metrix nor can Media Metrix predict the
outcome of any dispute.
MEDIA METRIX RELIES ON TECHNOLOGY LICENSED FROM OTHERS.
Media Metrix relies on technologies that Media Metrix licenses from third
parties. Media Metrix cannot assure you that these licenses will not infringe on
the proprietary rights of others. Moreover, these third-party technology
licenses may not continue to be available to it on commercially reasonable
terms, if at all. As a result, Media Metrix may need to obtain substitute
technology of lower quality or performance standards or at greater cost.
MEDIA METRIX MAY BE EXPOSED TO POSSIBLE LIABILITY FOR SUPPLYING INACCURATE
INFORMATION TO ITS CUSTOMERS.
Media Metrix may face liability for information that Media Metrix supplies
to customers if the information is inaccurate. The information in its databases,
like that in any database, may contain inaccuracies that its customers may not
accept. Dissatisfaction by its customers with its measurement methodology or
databases would materially adversely affect Media Metrix' ability to attract new
customers and retain existing customers. Any liabilities which Media Metrix may
incur to its customers because of irregularities or inaccuracies in the data
Media Metrix supplies to them could materially adversely affect its financial
results.
MEDIA METRIX' PROPRIETARY RIGHTS MAY BE ADVERSELY AFFECTED BY ITS STRATEGIC
PARTNERS.
Media Metrix expects to license some of its proprietary rights to strategic
partners in the course of its planned international expansion. While Media
Metrix will attempt to ensure that the quality of its service is maintained by
its strategic partners, Media Metrix cannot assure you that they will not take
actions that might materially adversely affect the value of Media Metrix'
proprietary rights or reputation.
MEDIA METRIX FACES RISKS RELATED TO STORAGE OF PERSONAL INFORMATION ABOUT ITS
PANELISTS.
Media Metrix does not attempt to capture information regarding its
panelists' banking, credit card or password data. This information, however, may
come into its possession. Media Metrix' panel data are released only in an
aggregated format or in a form not identifiable on an individual basis. However,
if someone penetrates its network security or otherwise misappropriates
sensitive data about its panelists, Media Metrix could be subject to liability.
These liabilities could include claims for unauthorized purchases with credit
card information, impersonation or other similar fraud claims. They could also
include claims for other misuses of personal information, as for unauthorized
marketing purposes.
MEDIA METRIX FACES RISKS OF INDUSTRY INITIATIVES.
Several key industry organizations, including the Internet Advertising
Bureau, the Media Ratings Council, the Advertising Research Foundation and FAST
Forward, have begun initiatives focusing on appropriate standards for Internet
audience measurement. Media Metrix' products and services may ultimately not
comply with recommended industry guidelines if Media Metrix determines that
compliance would not be economically feasible or otherwise not consistent with
its business strategy. To the extent that its measurement approach diverges from
the course of action recommended by some or all
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of these trade groups, Media Metrix' business and financial results could be
materially and adversely affected.
MEDIA METRIX FACES RISKS ASSOCIATED WITH POTENTIAL GOVERNMENTAL REGULATION.
Media Metrix is currently not subject to direct federal, state or local
regulation or laws or regulations applicable to the Internet, other than
regulations applicable to businesses generally. However, due to the increasing
popularity and use of the Internet, it is possible that a number of laws and
regulations may be adopted covering:
- user privacy;
- freedom of expression;
- pricing;
- content;
- quality of products and services;
- taxation;
- advertising;
- intellectual property rights; and
- information security.
The nature and effect of any proposed legislation or regulation cannot be
fully determined. The adoption of any such legislation could dampen the growth
in use of the Internet generally and decrease its acceptance as a
communications, commercial and advertising medium. Any legislation which could
have an adverse effect on the growth of the Internet could decrease the demand
for Media Metrix' services.
THERE MAY BE LIMITS IMPOSED ON USES OF PERSONAL INFORMATION GATHERED VIA THE
INTERNET.
Several states have proposed legislation that would limit the uses of
personal user information gathered via the Internet. These regulations have
required proprietary online service and Web site owners to establish privacy
policies. The Federal Trade Commission has also recently settled a proceeding
with one online service regarding the manner in which personal information is
collected from users and provided to third parties. Also, the European Union has
enacted its own privacy regulations that may result in limits on the collection
and use of user information. Because all of Media Metrix' panelists consent to
the retrieval of their personal data, to date these regulations and proceedings
have not impacted Media Metrix' operations. In addition, Media Metrix has
adopted a privacy policy applying to the data it collects from its panelists.
The Federal Trade Commission has recently begun to proceed against
Internet-related companies which the Federal Trade Commission believes have not
strictly abided by their stated personal information privacy policies. Media
Metrix may also become subject to claims arising from the information collected
or used by its subsidiary, AdRelevance, in generating data for advertising
tracking services.
Changes to existing laws or the passage of new laws intended to address
these issues could, among other effects:
- create uncertainty in the marketplace that could reduce demand for Media
Metrix' services;
- limit Media Metrix' ability to collect and to use data from its panels;
- increase the cost of doing business as a result of litigation costs or
increased service delivery costs; or
- decrease the efficacy of Internet advertising.
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MEDIA METRIX FACES UNCERTAINTY ABOUT ADDITIONAL FINANCING FOR ITS FUTURE CAPITAL
NEEDS.
If Media Metrix is unable to increase its revenues as anticipated, Media
Metrix will need to raise additional funds. Media Metrix may need additional
financing sooner if Media Metrix:
- decides to expand faster than planned;
- develops new or enhanced services or products ahead of schedule;
- needs to respond to competitive pressures; or
- needs to acquire for cash complementary products, businesses or
technologies.
If Media Metrix raises additional funds through the sale of equity or
convertible debt securities, the value of its outstanding common stock may be
diluted. Media Metrix may have to issue securities that have rights, preferences
and privileges senior to its common stock. Media Metrix may not be able to raise
additional funds on terms favorable to it or at all.
MEDIA METRIX' PRINCIPAL STOCKHOLDERS, EXECUTIVE OFFICERS AND DIRECTORS HAVE
SUBSTANTIAL CONTROL OVER ITS AFFAIRS.
Media Metrix' executive officers and directors and entities affiliated with
them in the aggregate beneficially owned approximately [ ]% of the outstanding
Media Metrix common stock as of [_____ __], 2000. In particular, The NPD Group,
which is controlled by Tod Johnson, Media Metrix' Chairman and Chief Executive
Officer, owns approximately 21% of the outstanding Media Metrix common stock.
These stockholders acting together have the ability to exert substantial
influence over all matters requiring the approval of the Media Metrix
stockholders. These matters include the election and removal of directors and
any merger, consolidation or sale of all or substantially all of Media Metrix'
assets. In addition, they may substantially influence the management of Media
Metrix' business and affairs. This concentration of ownership could have the
effect of delaying, deferring or preventing a change in control, or impeding a
merger or consolidation, takeover or other business combination.
THERE MAY BE VOLATILITY IN MEDIA METRIX' STOCK PRICE.
Media Metrix' common stock, which is traded on the Nasdaq National Market,
has experienced significant price and volume fluctuations. These fluctuations
are likely to continue in the future. The market prices of the securities of
Internet-related companies have been especially volatile. Some companies that
have had volatile market prices for their securities have been subject to
securities class action suits filed against them. If a suit were to be filed
against Media Metrix, regardless of the outcome, it could result in substantial
costs and a diversion of its management's attention and resources.
RISKS RELATING TO JUPITER
JUPITER MAY BE UNABLE TO ATTRACT AND RETAIN EXPERIENCED PERSONNEL.
Jupiter's success depends in large part on the continued contributions of
its senior management team, research analysts and sales representatives, and
therefore, on Jupiter's ability to retain its existing management, research
analysts and sales representatives and to increase the number of new research
analysts and sales representatives that it hires. As of June 30, 2000, Jupiter
had 68 research analysts and 107 sales representatives. Jupiter expects to
increase its hiring of research analysts and sales representatives significantly
in the next few years. Jupiter faces intense competition in hiring and retaining
personnel from, among others, technology and Internet companies, market research
and consulting firms, print and electronic publishing companies and financial
services companies. Many of
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these firms have substantially greater financial resources than Jupiter does to
attract and retain qualified personnel from a limited pool of attractive
candidates. In addition, some people that Jupiter may attempt to hire could be
subject to non-competition agreements that could impede its recruitment efforts.
RAPID GROWTH IN JUPITER'S BUSINESS COULD STRAIN ITS MANAGERIAL, OPERATIONAL AND
FINANCIAL RESOURCES.
The anticipated future growth of Jupiter's business will place a
significant strain on its managerial, operational and financial resources.
Jupiter had 142 employees at December 31, 1998, 270 employees at December 31,
1999 and 425 employees at June 30, 2000. Jupiter anticipates hiring a
substantial number of research analysts, sales representatives and other
employees in the foreseeable future to expand its product and service offerings
and to expand its sales of such products and services. Jupiter may also continue
to open additional offices in foreign countries. For example, Jupiter recently
opened offices in Munich, Germany, Tokyo, Japan and Sydney, Australia.
Furthermore, Jupiter recently signed a lease for a new facility in New York City
where it plans to consolidate its current locations in New York City as well as
provide for future growth. As Jupiter expands, it expects that it will need to
continually improve its financial and managerial controls, billing systems,
reporting systems and procedures. In addition, as Jupiter expands it will also
need to increase its employee training efforts. If Jupiter is unable to manage
its growth effectively, its business and financial results may suffer.
JUPITER HAS ONLY RECENTLY INTRODUCED MANY OF ITS PRODUCTS AND SERVICES.
Jupiter has recently launched many of the research services that it offers.
Additionally, a number of its conferences were first introduced in 2000. As a
result, Jupiter has a limited operating history upon which you can evaluate its
business and the products and services that Jupiter offers, including those
products and services offered by its subsidiaries, Internet Research Group and
Net Market Makers. Due to Jupiter's limited operating history, it is difficult
or impossible for Jupiter to predict future results of operations. Moreover, due
to Jupiter's limited operating history, any evaluation of its business and
prospects must be made in light of the risks and uncertainties frequently
encountered by companies in new and rapidly evolving markets such as Jupiter's.
Many of these risks and uncertainties are discussed elsewhere in this section.
Jupiter may not be successful in addressing these risks and uncertainties.
JUPITER HAS A HISTORY OF OPERATING LOSSES WHICH MAY CONTINUE FOR THE FORESEEABLE
FUTURE.
Jupiter has incurred substantial costs to create, market and distribute its
products and services, to retain qualified personnel, including management,
research analysts and sales representatives, and to grow its business. As a
result, Jupiter incurred net losses of approximately $2.1 million in 1998 and
$630,000 in 1999. As a percentage of total revenues, Jupiter's net losses
equaled 14.5% in 1998 and 1.7% in 1999.
Jupiter intends to invest heavily in new products and services, leasehold
and technology improvements, new research and sales personnel and international
expansion. Because of this, Jupiter will need to achieve significant revenue
increases to achieve and maintain profitability. The number of clients for
Jupiter's research products and services, as well as the number of attendees to
its conferences, may grow more slowly than Jupiter anticipates or may even
decrease in the future. In addition, although Jupiter recorded net income of
approximately $3.2 million in the first quarter of 2000, substantially all of
which was attributable to a non-recurring gain from the sale of an investment,
Jupiter may not be able to sustain or increase its profits on a quarterly or
annual basis in the future.
JUPITER'S OPERATING RESULTS MAY FLUCTUATE IN FUTURE PERIODS.
Jupiter's revenues, expenses and operating results have varied in the past
and may fluctuate significantly in the future due to a variety of factors that
are outside of Jupiter's control. These factors include, among others:
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- the level and timing of new business and renewals of subscriptions to
Jupiter's research products and services;
- changes in the market demand for research products or analysis regarding
Internet commerce;
- the levels of attendance at Jupiter's Internet conferences; and
- the extent to which Jupiter experiences increased competition.
These factors could affect Jupiter's quarterly as well as long-term
financial results. In particular, changes in the demand for Jupiter's products,
competition or the levels of attendance at Jupiter's Internet conferences each
could have both short-term and long-term adverse effects on Jupiter's business.
Jupiter's revenues, expenses and operating results may also fluctuate
significantly in the future as a result of its business decisions. These
decisions include, among others:
- the timing of the introduction and marketing of Jupiter's new research
products and services;
- the timing of Jupiter's conferences;
- changes in operating expenses; and
- the timing of acquisitions and their impact on Jupiter's operations and
operating results.
The sales of Jupiter's research products and services and the success of
Jupiter's conferences are difficult to forecast accurately. If Jupiter's
revenues fall short of expectations, it may not be able to adjust its fixed
expenses to compensate for this shortfall on a timely basis. Further, as a
strategy for remaining competitive, Jupiter may have to make pricing, service or
marketing decisions that could cause its business and financial results to
suffer.
Due to all the foregoing factors and other risks discussed in this section,
you should not rely on quarter-to-quarter comparisons of Jupiter's results of
operations as an indication of future performance.
JUPITER'S REVENUES ARE SUBSTANTIALLY DEPENDENT ON THE SALE OF ITS RESEARCH
SERVICES.
Jupiter's business and financial results are dependent on Jupiter's ability
to attract and retain clients for its Research Services. In addition, Jupiter's
business model assumes that it will be able to increase the level of research
sales over time to Jupiter's existing clients. Revenues from the sale of
Research Services, as a percentage of Jupiter's total revenues, were 41.9% in
1998, 60.7% in 1999 and 65.5% in the first quarter of 2000. Jupiter's ability to
attract and retain Research Services clients and its ability to increase sales
to existing clients are subject to a number of risks, including the following:
- Jupiter may be unsuccessful in delivering high-quality and timely research
analysis to its clients;
- Jupiter may be unsuccessful in anticipating and understanding market trends
and the changing needs of its clients;
- the use of the Internet as a medium for commerce, both in the United States
and abroad, may not continue to grow as Jupiter currently anticipates;
- Jupiter's marketing programs designed to attract and retain clients may not
succeed; and
- Jupiter may not be able to hire and retain a sufficiently large number of
research and sales personnel in a very competitive job market.
JUPITER'S BUSINESS MAY SUFFER IF IT IS UNABLE TO ATTRACT ATTENDEES, SPONSORS AND
EXHIBITORS TO ITS CONFERENCES.
Jupiter's business and financial results depend in part on its ability to
attract attendees, sponsors and exhibitors to its growing number of conferences.
Revenues from conferences, as a percentage of Jupiter's
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total revenues, were 33.2% in 1998, 29.6% in 1999 and 29.8% in the first quarter
of 2000. Jupiter may not be able to select topics for its conferences that
potential attendees, sponsors and exhibitors will find timely and interesting.
Jupiter also cannot assure you that its competitors will not produce conferences
on similar topics or that Jupiter will continue to be able to attract prominent
industry leaders to participate in its conferences. If Jupiter is unable to
produce compelling events, if it faces increased competition for its conferences
or if it is unable to attract prominent speakers, the growth of Jupiter's
conference business will be hindered. Jupiter's business and financial results
may also suffer if it is forced to cancel any conferences as a result of
inclement weather or another unexpected event.
JUPITER'S BUSINESS MAY SUFFER IF IT PROVES UNABLE TO ANTICIPATE MARKET TRENDS OR
IF IT FAILS TO PROVIDE INFORMATION THAT IS USEFUL TO ITS CLIENTS.
Jupiter's success depends in large part on its ability to anticipate,
research and analyze rapidly changing technologies and industries and on its
ability to provide this information in a timely and cost-effective manner. If
Jupiter is unable to continue to provide credible and reliable information that
is useful to companies engaged in online commerce, or to provide this
information in a timely manner, Jupiter's business and financial results may
suffer.
Jupiter's research products and services, as well as its conferences, focus
on Internet commerce. Internet commerce is relatively new and is undergoing
frequent and dramatic changes, including the introduction of new products and
the obsolescence of others, shifting business strategies and revenue models, the
formation of numerous new companies and high rates of growth. Because of these
rapid and continuous changes in the Internet commerce markets, Jupiter faces
significant challenges in providing timely analysis and advice. Many of the
industries and areas on which Jupiter focuses are relatively new, and it is very
difficult to provide predictions and projections as to the future marketplace,
revenue models and competitive factors. In addition, many companies have not
embraced the use of the Internet as a medium for commerce and are unclear as to
how to allocate corporate resources effectively. As a result, some companies may
conclude that Jupiter's research products are not useful to their businesses.
Further, the need to continually update Jupiter's research requires the
commitment by Jupiter of substantial financial and personnel resources.
If Jupiter's predictions or projections prove to be wrong, or if Jupiter is
unable to continually update its information, Jupiter's reputation may suffer
and demand for its research products and services may decline. In addition, if
companies do not agree with Jupiter's analysis of market trends and the areas on
which Jupiter chooses to focus its efforts, Jupiter's business and financial
results may suffer.
JUPITER FACES INTENSE COMPETITION IN PROVIDING ITS RESEARCH PRODUCTS AND
SERVICES, AS WELL AS IN PRODUCING CONFERENCES, AND SUCH COMPETITION IS LIKELY TO
INCREASE IN THE FUTURE.
Jupiter may not be able to compete successfully against current or future
competitors, and the competitive pressures that it faces may cause Jupiter's
business and financial results to suffer. Jupiter's principal current competitor
is Forrester Research, Inc. In 1999, Gartner Group, Inc., a large holder of
Jupiter common stock, began competing directly in providing research products
related to Internet commerce. Although Gartner Group has not been actively
involved in Jupiter's day-to-day operations since it first invested in Jupiter
in October 1997, Jupiter has provided it with select confidential and
proprietary data. As a result, Gartner Group could use this confidential and
proprietary data in developing and marketing competing products and services. A
number of other companies compete with Jupiter in providing research and
analysis related to a specific industry or geographic area. In addition,
Jupiter's competitors include information technology research firms, business
consulting and accounting firms, electronic and print publishing companies and
equity analysts employed by financial services companies.
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Jupiter's ability to compete both in the United States and abroad depends
upon many factors, many of which are outside of its control. Jupiter believes
that the primary competitive factors determining success in its markets include
the quality and timeliness of its research and analysis, its ability to offer
products and services that meet the changing needs of its customers, the prices
it charges for its various research products and general economic conditions.
Jupiter expects competition to increase because of the business
opportunities presented by the growth of Internet commerce around the world.
Competition may also intensify as a result of industry consolidation, because
the markets in which Jupiter operates face few substantial barriers to entry or
because some of Jupiter's competitors may provide additional or complementary
services, such as consulting services. Increased competition may result in
reduced operating margins, loss of market share and diminished value in
Jupiter's products and services, as well as different pricing, service or
marketing decisions.
Jupiter's current and potential competitors include many companies that
have substantially greater financial, information gathering and marketing
resources than Jupiter has. For example, Gartner Group and Forrester Research
each had higher revenues than Jupiter did during the first quarter of 2000, and
each currently has greater information gathering and marketing resources than
Jupiter has. This may allow them to devote greater resources than Jupiter can to
the promotion of their brand and to the development and sale of their products
and services. Jupiter may not be able to compete successfully against current
and future competitors.
JUPITER COULD FACE ADDITIONAL RISKS AND CHALLENGES IF IT CONTINUES TO EXPAND
INTERNATIONALLY.
Jupiter's business plan calls for accelerated international growth. For
example, Jupiter recently opened offices in Munich, Germany, Tokyo, Japan and
Sydney, Australia. Expansion into new geographic territories requires
considerable management and financial resources and may negatively impact
Jupiter's near-term results of operations.
Jupiter's current international operations, as well as any future
international operations, are subject to numerous challenges and risks,
including, but not limited to, the following:
- political and economic conditions in various jurisdictions;
- fluctuations in currency exchange rates;
- tariffs and other trade barriers;
- adverse tax consequences; and
- difficulties in protecting intellectual property rights in international
jurisdictions.
Jupiter also relies on local distributors in various countries, including
Singapore, Brazil, China, Taiwan, South Korea and Israel, to distribute its
Research Services. If any of these distribution arrangements are terminated,
Jupiter may not be able to replace the terminated arrangement with an equally
beneficial arrangement. Jupiter also intends to enter into additional
distribution arrangements in other countries, but it may not be able to do so on
acceptable terms. Jupiter's receipt of revenues from these distribution
arrangements may also be dependent on factors which are beyond its control,
including the efforts of the distributors.
JUPITER'S BUSINESS MAY SUFFER IF THE USE OF THE INTERNET AS A COMMERCIAL
MARKETPLACE DOES NOT CONTINUE TO GROW.
Because Jupiter focuses solely on Internet commerce, Jupiter's future
success depends on the continued development and acceptance of the Internet as a
viable commercial medium. However, the continued development and acceptance of
the Internet as a widely-used medium for commerce and
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communication is uncertain. A number of factors could prevent such continued
development and acceptance, including the following:
- unwillingness of companies and consumers to shift their purchasing from
traditional vendors to online vendors;
- security and authentication concerns with respect to the transmission of
confidential information, such as credit card numbers, over the Internet;
- privacy concerns, including those related to the ability of Web sites to
gather user information without the user's knowledge or consent; and
- significant uncertainty about the demand and market acceptance for Internet
advertising and the lack of standards to measure the effectiveness of
Internet advertising.
LAWS AND REGULATIONS COULD SLOW THE GROWTH OF THE INTERNET AND NEGATIVELY AFFECT
THE ACCEPTANCE OF THE INTERNET AS A COMMERCIAL MEDIUM.
Laws and regulations regarding Internet companies and commercial
transactions conducted over the Internet could slow the growth in use of the
Internet generally and decrease the acceptance of the Internet as a commercial
medium. For example, as the popularity and use of the Internet increases, it is
possible that a number of laws and regulations may be adopted in the United
States or in other countries covering issues such as taxation, intellectual
property matters, advertising and other areas. Jupiter cannot predict the
impact, if any, that future laws or regulations may have on its business.
JUPITER'S BUSINESS MAY SUFFER IF JUPITER IS UNABLE TO MAINTAIN OR ENHANCE
AWARENESS OF THE JUPITER BRAND OR IF JUPITER INCURS EXCESSIVE EXPENSES
ATTEMPTING TO PROMOTE THE JUPITER BRAND.
Jupiter expects to expand its marketing activities to promote and
strengthen the Jupiter brand. Promoting and strengthening the Jupiter brand is
critical to Jupiter's efforts to attract and retain clients for its research
products, as well as to increase attendance at its conferences. Jupiter believes
that the importance of brand recognition will likely increase due to the
increasing number of competitors entering Jupiter's markets. In order to promote
the Jupiter brand, in response to competitive pressures or otherwise, Jupiter
may find it necessary to increase its marketing budget, hire additional
marketing and public relations personnel or otherwise increase its financial
commitment to creating and maintaining brand loyalty among its clients. If
Jupiter fails to effectively promote and maintain the Jupiter brand, or incurs
excessive expenses attempting to promote and maintain the Jupiter brand, its
business and financial results may suffer.
JUPITER FACES POTENTIAL LIABILITY FOR INFORMATION THAT IT PUBLISHES, PROVIDES AT
CONFERENCES OR DISSEMINATES THROUGH ITS RESEARCH ANALYSTS.
As a publisher and distributor of original research, market projections and
trend analyses, Jupiter faces potential liability based on a variety of
theories, including defamation, negligence, copyright or trademark infringement,
and other legal theories based on the nature, publication or distribution of
this information. Claims of this kind, whether brought in the United States or
abroad, would likely divert management time and attention and could result in
significant cost to investigate and defend, regardless of the merit of any of
these claims. The filing of any claims of this kind may also damage Jupiter's
reputation as a high-quality provider of unbiased, timely analysis and result in
client cancellations or overall decreased demand for its products and services.
In addition, if Jupiter becomes subject to these types of claims and is not
successful in its defense, it may be forced to pay substantial damages.
Jupiter's insurance may not adequately protect it against these claims.
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DISRUPTION OF JUPITER'S WEB SITE DUE TO SECURITY BREACHES AND SYSTEM FAILURES
COULD HARM JUPITER'S BUSINESS AND RESULT IN CLIENT CANCELLATIONS.
Jupiter's infrastructure and the infrastructure of Jupiter's service
providers are vulnerable to security breaches, computer viruses or similar
disruptive problems. These systems are also subject to telecommunications
failures, power loss and various other system failures. Any of these
occurrences, whether intentional or accidental, could lead to interruptions or
disruptions in the general operation of Jupiter's business. In addition, any of
these occurrences could also lead to interruptions, delays or cessation of
operation of Jupiter's Web site, which provides access to and distribution of
many of Jupiter's research products and services. For example, many Jupiter
Research Services clients pay Jupiter so that their employees can read Jupiter's
research solely on Jupiter's Web site. As a result, providing unimpeded access
to Jupiter's Web site is critical to servicing Jupiter's clients and providing
superior customer service. Jupiter's inability to provide continuous access to
its Web site could cause some of its clients to discontinue purchasing Jupiter's
research products and services, prevent or deter some people from purchasing
Jupiter's research products and services and harm its business reputation.
JUPITER MAY NOT BE ABLE TO PROTECT AND ENFORCE ITS INTELLECTUAL PROPERTY RIGHTS.
Jupiter provides its proprietary research products to hundreds of different
companies throughout the world, including some companies that compete with
Jupiter in some manner. As a result, any protective steps Jupiter has taken may
be inadequate to protect its intellectual property and to deter misappropriation
of the original research and analysis that Jupiter develops. Jupiter also may be
unable to detect the unauthorized use of its intellectual property or take
appropriate steps to enforce its intellectual property rights. Moreover,
effective trademark, copyright and trade secret protection may not be available
in every country in which Jupiter offers its research products and services to
the extent these protections are available in the United States.
Jupiter's failure to adequately protect its intellectual property, either
in the United States or abroad, could harm the Jupiter brand or its trademarks,
devalue its proprietary research and analysis and affect its ability to compete
effectively. Defending its intellectual property rights could result in the
expenditure of significant financial and managerial resources, which could harm
its financial results.
Furthermore, other parties may assert claims against Jupiter that Jupiter
has misappropriated a trade secret or infringed a patent, copyright, trademark
or other proprietary right belonging to them. Any infringement or related
claims, even if not meritorious, could be costly and time consuming to litigate,
may distract management from other tasks of operating the business and may
result in the loss of significant rights and the loss of Jupiter's ability to
operate its business.
JUPITER MAY NOT BE ABLE TO SUCCESSFULLY MAKE OR INTEGRATE ACQUISITIONS OF OTHER
COMPANIES, SERVICES OR PRODUCTS.
Jupiter has limited experience in acquiring other companies, services or
products. Although it has no present agreement, other than the merger agreement,
relating to any acquisition, it may make other acquisitions in the future.
However, Jupiter may not be able to complete future acquisitions successfully or
to integrate an acquired entity with its current business. In addition, the key
personnel of the acquired company may decide not to work for Jupiter. If Jupiter
makes other types of acquisitions, it could have difficulty assimilating the
acquired services or products. These difficulties could disrupt its current
business, distract its management and employees, increase its expenses and
adversely affect its financial results. Furthermore, Jupiter may incur debt or
issue equity securities to pay for any future acquisitions. The issuance of
equity securities could be dilutive to its existing stockholders' interests.
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JUPITER IS DEPENDENT ON KEY MANAGEMENT PERSONNEL FOR ITS FUTURE SUCCESS.
Jupiter's future success will depend in part on the continued service of a
number of key management personnel. Jupiter does not carry key person life
insurance on any of its management personnel. The loss of key management
personnel, in particular Gene DeRose, its Chief Executive Officer, or Kurt
Abrahamson, its President and Chief Operating Officer, could harm its business
and financial results.
FUTURE SALES OF JUPITER COMMON STOCK MAY NEGATIVELY AFFECT JUPITER'S STOCK
PRICE.
Sales of a substantial number of shares of Jupiter common stock in the
public market could cause the market price of its common stock to decline and
could impair its ability to raise additional capital through the sale of equity
securities.
JUPITER STOCK HAS EXPERIENCED, AND MAY CONTINUE TO EXPERIENCE PRICE AND VOLUME
FLUCTUATIONS.
The market price of Jupiter common stock has fluctuated in the past and is
likely to continue to be highly volatile and could be subject to wide
fluctuations. In addition, the market prices of the securities of
Internet-related companies have been especially volatile. These fluctuations
often have been unrelated or disproportionate to the operating performance of
these companies. These broad market and industry factors may materially
adversely affect the market price of Jupiter common stock regardless of
Jupiter's actual operating performance. In the past, companies that have
experienced volatility in the market price of their stock have been the object
of securities class action litigation. Any securities class action litigation,
it could result in substantial costs and divert the attention and resources of
Jupiter's management.
JUPITER CANNOT PREDICT FUTURE CAPITAL NEEDS, AND IT MAY NOT BE ABLE TO SECURE
ADDITIONAL FINANCING.
Jupiter may need to raise additional funds in the future to fund its
operations, to expand or enhance the range of products and services it offers or
to respond to competitive pressures and/or perceived opportunities. Jupiter
cannot be sure that additional financing will be available on terms favorable to
it, or at all. If adequate funds are not available when required or on
acceptable terms Jupiter may be forced to cease its operations, and even if it
were able to continue its operations, its business and financial results may
suffer.
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THE SPECIAL STOCKHOLDERS MEETINGS
TIME AND PLACE OF THE SPECIAL MEETINGS; MATTERS TO BE CONSIDERED
Media Metrix. The Media Metrix special stockholders meeting will be held on
[___] [___], 2000 at 9:00 am, local time, at the offices of Fried, Frank,
Harris, Shriver & Jacobson, One New York Plaza, 29th Floor, New York, New York
10004. At the Media Metrix special stockholders meeting, stockholders of Media
Metrix will vote on a proposal to approve amendments to Media Metrix' charter
changing the name of Media Metrix to Jupiter Media Metrix, Inc. and increasing
the number of shares of common stock Media Metrix is authorized to issue from
60,000,000 to 150,000,000, and on a proposal to approve the issuance of shares
in connection with the merger. On [___], 2000, there were [__________] shares of
Jupiter common stock issued and outstanding. Assuming there are no additional
issuances of Jupiter common stock before the merger, approximately [___________]
shares of Media Metrix common stock will be issued in the merger.
The Media Metrix stockholders are also being asked to approve amendments to
the Media Metrix 2000 Equity Incentive Plan and the 2000 Employee Stock Purchase
Plan to increase the number of shares available for issuance under these plans.
The proposed amendments are described in greater detail in the sections called
"Amendment of the Media Metrix 2000 Equity Incentive Plan" at page 80 and
"Amendment of the Media Metrix 2000 Employee Stock Purchase Plan" at page 87.
THE MEDIA METRIX BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE MERGER AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF MEDIA
METRIX VOTE "FOR" EACH OF THE PROPOSALS BEING PRESENTED TO them.
Jupiter. The Jupiter special stockholders meeting will be held on [___]
[___], 2000 at 9:00 am, local time, at [____]. At the Jupiter special
stockholders meeting, stockholders of Jupiter will vote on a proposal to adopt
the merger agreement, thereby approving the merger. THE JUPITER BOARD OF
DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE MERGER AND
UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF JUPITER VOTE "FOR" THE ADOPTION
OF THE MERGER AGREEMENT.
VOTES REQUIRED
Media Metrix. The affirmative vote of the holders of a majority of the
outstanding shares of Media Metrix common stock entitled to vote is required to
approve the proposal to amend Media Metrix' charter to change the name of Media
Metrix and to increase the number of shares of common stock Media Metrix is
authorized to issue. The affirmative vote of the holders of a majority of the
total number of shares of Media Metrix common stock present in person or by
proxy at the Media Metrix special stockholders meeting is required to approve
the issuance of shares in connection with the merger and the amendments to the
two Media Metrix employee stock plans. If the proposal to amend the charter is
not approved, the merger cannot proceed because Media Metrix does not presently
have enough shares available to issue in the merger. If you abstain or fail to
vote your shares on that proposal, it will have the same effect as voting
against that proposal and the merger.
On [__], 2000, Media Metrix directors and executive officers and entities
affiliated with them beneficially owned [ ] shares of Media Metrix common stock,
excluding [ ] shares which may be acquired upon exercise of options. These
shares represented approximately [___]% of the outstanding shares of Media
Metrix common stock. Each of the directors and executive officers of Media
Metrix has indicated that he or she intends to vote in favor of each of the
proposals to be voted on at the Media Metrix special stockholders meeting.
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Four Media Metrix stockholders, including one affiliate of Media Metrix
whose 4,118,759 shares are included in the [ ] share number referred to in the
preceding paragraph, have entered into a voting agreement with Jupiter in which
they have agreed to vote all 7,127,972 of their shares of Media Metrix common
stock in favor of the proposals required to complete the merger. These shares
represented approximately 36% of the outstanding shares of Media Metrix common
stock.
Jupiter. The affirmative vote of the holders of a majority of the
outstanding shares of Jupiter common stock entitled to vote is required to adopt
the merger agreement. If you abstain or fail to vote your shares on this
proposal, it will have the same effect as voting against adoption of the merger
agreement.
On [__], 2000, Jupiter directors and executive officers beneficially owned
[ ] shares of Jupiter common stock, excluding [ ] shares which may be acquired
upon exercise of options. These shares represented approximately [___]% of the
outstanding shares of Jupiter common stock. Each of the directors and executive
officers of Jupiter has indicated that he or she intends to vote for the
adoption of the merger agreement.
Three Jupiter stockholders, including two directors whose 3,379,736 shares
are included in the [ ] share number referred to in the preceding paragraph,
have entered into a voting agreement with Media Metrix in which they have agreed
to vote all 4,125,071 of their shares of Jupiter common stock in favor of
adoption of the merger agreement. These shares represented approximately 26% of
the outstanding shares of Jupiter common stock.
RECORD DATE; QUORUM
Media Metrix. Only holders of record of Media Metrix common stock at the
close of business on [__], 2000 are entitled to receive notice of and vote at
the Media Metrix special stockholders meeting. As of [__], 2000, there were [ ]
shares of Media Metrix common stock entitled to vote, held by [ ] holders of
record. Each share of Media Metrix common stock is entitled to one vote. Holders
of a majority of the outstanding shares of Media Metrix common stock entitled to
vote, present in person or represented by proxy, will constitute a quorum for
the transaction of business at the Media Metrix special stockholders meeting.
We will have a list of Media Metrix stockholders entitled to vote at the
Media Metrix special stockholders meeting available during normal business hours
at the offices of Media Metrix, Inc., 250 Park Avenue South, New York, New York
10003, for the ten day period before the Media Metrix special stockholders
meeting, and also at the special stockholders meeting.
Jupiter. Only holders of record of Jupiter common stock at the close of
business on [__], 2000 are entitled to receive notice of and vote at the Jupiter
special stockholders meeting. As of [__], 2000, there were [ ] shares of Jupiter
common stock entitled to vote, held by [ ] holders of record. Each share of
Jupiter common stock is entitled to one vote. Holders of fifty percent of the
outstanding shares of Jupiter common stock entitled to vote, present in person
or represented by proxy, will constitute a quorum for the transaction of
business at the Jupiter special stockholders meeting.
We will have a list of Jupiter stockholders entitled to vote at the Jupiter
special stockholders meeting available during normal business hours at the
offices of Jupiter, 627 Broadway, New York, New York 10012, for the ten day
period before the Jupiter special stockholders meeting, and also at the special
stockholders meeting.
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HOW PROXIES WILL BE VOTED AT THE SPECIAL STOCKHOLDERS MEETINGS
Shares represented by a proxy will be voted at the special stockholders
meetings as specified in the proxy. Properly executed proxies that do not
contain voting instructions will be voted "FOR" each of the proposals to be
considered at the special stockholders meetings.
TREATMENT OF ABSTENTIONS AND BROKER NON-VOTES
Abstentions. If you submit a proxy that indicates an abstention from voting
on any of the proposals being submitted to stockholders for a vote, your shares
will be counted as present for purposes of determining the existence of a
quorum, but they will not be voted on the proposal or proposals as to which you
are abstaining from voting.
In the case of Media Metrix, an abstention from voting on a proposal will
have the same effect as a vote against that proposal. In the case of Jupiter, an
abstention from voting on the adoption of the merger agreement will have the
same effect as a vote against adoption of the merger agreement.
Broker Non-Votes. Under NASD rules, your broker cannot vote your shares of
Media Metrix common stock or your shares of Jupiter common stock without
specific instructions from you.
If you do not provide instructions with your proxy, your bank or broker may
deliver a proxy card expressly indicating that it is NOT voting your shares;
this indication that a broker is not voting your shares is referred to as a
"broker non-vote." Broker non-votes will be counted for the purpose of
determining the existence of a quorum, but will not be voted on any proposal
being submitted to stockholders.
In the case of Media Metrix, a broker non-vote will have the same effect as
a vote against each of the proposals being submitted to Media Metrix
stockholders. In the case of Jupiter, a broker non-vote will have the same
effect as a vote against adoption of the merger agreement.
HOW TO REVOKE A PROXY
Your grant of a proxy on the enclosed proxy card does not prevent you from
voting in person at your stockholders meeting, which would automatically revoke
your proxy. If your shares are held in the name of your broker, bank or other
nominee and you wish to vote at the stockholders meeting, you will need to
obtain a proxy from the institution that holds your shares.
In addition, a Media Metrix stockholder may revoke a proxy at any time
before it is voted at the Media Metrix special stockholders meeting by
delivering a later dated signed proxy or a written notice of revocation to Gail
A. Balcerzak, General Counsel and Secretary of Media Metrix, 250 Park Avenue
South, New York, New York 10003.
A Jupiter stockholder may revoke a proxy at any time before it is voted at
the Jupiter special stockholders meeting by delivering a later dated signed
proxy or a written notice of revocation to Jean K. Robinson, Secretary of
Jupiter, 627 Broadway, New York, New York 10012.
SOLICITATION OF PROXIES
We will each bear the cost of soliciting proxies from our own holders of
common stock, except that the cost of printing and mailing this joint proxy
statement/prospectus to our stockholders is being shared by us equally. In
addition to solicitation by mail, our directors, officers and employees may
solicit proxies from holders of common stock by telephone, in person or through
other means. We will not compensate these people for this solicitation, but we
will reimburse them for reasonable out-of-pocket expenses they have in
connection with this solicitation. We will also arrange for brokerage firms,
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fiduciaries and other custodians to send solicitation materials to the
beneficial owners of shares held of record by those persons. We will reimburse
these brokerage firms, fiduciaries and other custodians for their reasonable
out-of-pocket expenses.
APPRAISAL RIGHTS
Both Media Metrix and Jupiter are organized under Delaware law. Under
Delaware law, neither Media Metrix' nor Jupiter's stockholders have a right to
receive the appraised value of their shares in connection with the merger.
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THE MERGER
GENERAL
The merger agreement provides for the merger of a wholly owned subsidiary
of Media Metrix with and into Jupiter. As a result of the merger, Jupiter will
become a wholly owned subsidiary of Media Metrix. Jupiter stockholders will
receive 0.946 of a share of Media Metrix common stock for each share of Jupiter
common stock they own, and Media Metrix will be renamed Jupiter Media Metrix,
Inc.
On June 26, 2000, the last trading day before we publicly announced the
merger, the closing price of Media Metrix common stock was $28.25. Had the
merger then taken place, each share of Jupiter common stock would have been
converted into 0.946 of a share of Media Metrix common stock with a value of
approximately $26.72. This represented a premium of 16.2% over the closing price
of Jupiter common stock on that day. When we complete the merger, the value you
receive for your Jupiter common stock may be more or less than this amount
depending on the market value of Media Metrix common stock at that time.
As a result of the merger, former Jupiter stockholders will own
approximately 45%, and Media Metrix stockholders immediately before the merger
will own approximately 55%, of Jupiter Media Metrix. These percentages are based
on the number of shares of Media Metrix common stock and Jupiter common stock
outstanding on June 26, 2000 on a fully diluted basis.
The discussion in this joint proxy statement/prospectus of the merger and
the description of the principal terms of the merger agreement and the merger
are summaries only. You should refer to the merger agreement for the details of
the merger and the terms of the merger agreement. We have attached a copy of the
merger agreement to this joint proxy statement/prospectus as Annex A. Please see
"The Merger Agreement" on page 69 for a discussion of the terms of the merger
agreement.
BACKGROUND OF THE MERGER
In January 2000, Tod Johnson, Chairman and Chief Executive Officer of Media
Metrix, and Gene DeRose, Chairman and Chief Executive Officer of Jupiter,
participated in an investor conference where each saw the other's presentation
of his company's business model. Later that month, Mary Ann Packo, Media Metrix'
President and Chief Operating Officer, and Gene DeRose met to discuss a possible
strategic alliance between Media Metrix and Jupiter. Over the course of the
conversation, the possibility of a merger between the two companies was
addressed but not pursued.
In March 2000, Tod Johnson and Mary Ann Packo met with Gene DeRose and Kurt
Abrahamson, Jupiter's President and Chief Operating Officer, to discuss the
possible forms of a strategic alliance between the two companies. During March
and early April 2000, managements of both companies continued to negotiate the
terms of the strategic alliance.
In early April 2000, Mr. DeRose and Mr. Johnson agreed to change the focus
of their discussions to whether a business combination presented an attractive
opportunity for both companies, and agreed to engage in discussions on how such
a transaction could be structured. On April 18, 2000, Media Metrix and Jupiter
entered into a confidentiality agreement covering the exchange of information
between them. On April 20, 2000, Mr. Johnson and Mr. DeRose met to discuss the
basic terms of the transaction. Mr. Johnson proposed a stock-for-stock merger of
equals in which Mr. Johnson would remain the Chairman and Chief Executive
Officer of the combined enterprise and Mr. DeRose would serve as the President
of the combined enterprise.
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In conjunction with the initial discussions, the companies began consulting
with various financial and legal advisors about issues raised in the discussions
among their executives. Media Metrix retained Thomas Weisel Partners LLC as its
financial advisor and retained Fried, Frank, Harris, Shriver & Jacobson and
Fulbright & Jaworski L.L.P. as its legal counsel. Jupiter retained Morgan
Stanley & Co. Incorporated as its financial advisor and retained Brobeck,
Phleger & Harrison LLP as its legal counsel. Working with these advisors, Media
Metrix and Jupiter began conducting their due diligence investigations using
publicly available materials and began analyses of a possible combination. These
consultations continued throughout the remaining merger discussions.
Following the April 20, 2000 meeting between Tod Johnson and Gene DeRose,
Mary Ann Packo and Thomas Lynch, Chief Financial Officer of Media Metrix, had
several telephone conversations and meetings with Kurt Abrahamson and Jean
Robinson, the Chief Financial Officer of Jupiter, to discuss the structure and
implementation of a stock-for-stock merger of Media Metrix and Jupiter, and to
conduct due diligence on each other's company.
On May 8, 2000, Mr. Johnson and Mr. DeRose met to further discuss the
strategic rationale for a merger, the appropriate exchange ratio and the
governance and management structure of the resulting entity. The discussions
remained at a general level, and no agreement regarding the specific terms of a
possible stock-for-stock merger was reached. Following the May 8, 2000 meeting,
Mr. Johnson and Mr. DeRose engaged in numerous telephone discussions concerning
a potential merger.
On May 25, 2000, representatives of Media Metrix and Jupiter, including
their legal and financial advisors, met at the offices of Morgan Stanley to
discuss possible terms for a potential merger, to coordinate the logistics of
conducting the diligence process and to discuss a schedule for additional
discussions between the parties. During the meeting, senior management of the
two companies discussed their businesses and operations in greater detail and
Mr. Johnson and Mr. DeRose discussed, but did not agree to, an appropriate
exchange ratio for the merger and a governance and management structure for the
combined enterprise.
Following May 25, 2000, senior management of both companies held numerous
discussions regarding various business, financial, operational and technical
issues involved in combining the companies. Also during this period, members of
both boards held several informal conference calls with senior management of
their company to update board members on the status of negotiations.
On May 31, 2000, there was another meeting between Mr. Johnson and Mr.
DeRose. During that meeting, there were again discussions, but no agreement,
about an appropriate exchange ratio and a governance and management structure
for the combined enterprise.
On June 1, 2000, a draft merger agreement and other draft transaction
documents were distributed by Fried, Frank, Harris, Shriver & Jacobson.
On June 5, 2000, Jupiter's board of directors held a telephonic meeting to
discuss, among other things, the proposed merger with Media Metrix. Mr. DeRose
summarized Media Metrix' business, as well as the recent history of Jupiter's
negotiations with Media Metrix. Jupiter's board held an extensive discussion
regarding the relative merits and risks of the potential merger, including the
valuation and volatility risks relating to Media Metrix' stock and the likely
timing of, and the risks which could delay or prevent, closing the transaction.
As had been mutually agreed earlier that week, on June 8, 2000, Jeff
Ballowe, a member of Jupiter's board of directors, spoke with Mr. Johnson
regarding the transaction. On the same day, Robert Kavner, also a member of
Jupiter's board of directors, spoke with William Helman, a member of Media
Metrix' board, regarding the transaction. On June 9, 2000, Mr. Johnson and Mr.
DeRose spoke by telephone to discuss the principal terms of the transaction. Mr.
Johnson and Mr. DeRose discussed the ratio for
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exchanging shares of Jupiter common stock for shares of the combined enterprise,
which would be a fixed ratio, and the relative ownership by each company's
stockholders of the combined enterprise immediately after the merger. Mr.
Johnson and Mr. DeRose agreed in principle on other principal terms of the
merger, subject to the completion of due diligence, negotiation of the
definitive agreements, and approval of each company's board of directors.
Following June 9, 2000, Media Metrix, Jupiter and their respective advisors
intensified due diligence activities, communications coordination and
preparation of definitive documentation. Commencing on June 21, 2000 and
continuing throughout the following five days, representatives of Media Metrix
and Jupiter and their respective advisors met to complete due diligence,
negotiate the merger agreement and related agreements, and plan and prepare for
the announcement of the merger.
On June 24, 2000, the board of directors of Media Metrix met at the offices
of Thomas Weisel Partners to consider the proposed transaction. At this meeting,
Mr. Johnson and other members of management reviewed the transaction with the
board, including the strategic reasons for the proposed transaction, the
principal terms of the proposed transaction, a financial review of the proposed
transaction, a review of Jupiter's financial condition and business operations
and the results of Media Metrix' due diligence review.
Media Metrix' internal legal counsel and representatives of Fried, Frank,
Harris, Shriver & Jacobson discussed the principal terms of the merger agreement
and related documents. Representatives of Thomas Weisel Partners presented to
Media Metrix' board of directors its analyses of the strategic rationale for the
proposed business combination and its financial analysis of the proposed
transaction. The board of directors of Media Metrix scheduled a second meeting
for June 26, 2000, to give management the opportunity to resolve all remaining
open issues and report to the board.
On June 26, 2000, the board of directors of Jupiter held a special
telephonic meeting to consider the proposed transaction. At this meeting, Mr.
DeRose and other members of management reviewed the transaction with the board,
including the strategic reasons for the proposed transaction and the principal
financial and other terms of the proposed transaction. They also reviewed Media
Metrix' financial condition and business operations and the results of Jupiter's
due diligence investigations.
Jupiter's internal legal counsel and representatives from Brobeck, Phleger
& Harrison LLP outlined the directors' legal duties and responsibilities in
connection with considering the merger and discussed the principal terms of the
merger agreement and related documents. Representatives of Morgan Stanley
presented to Jupiter's board its analyses of the strategic rationale for the
proposed business combination and its financial analysis of the proposed merger.
Mr. DeRose and other members of management then described to the board the
resolution Jupiter had reached with Media Metrix on various open issues. Morgan
Stanley delivered its oral opinion to the board to the effect that, based on the
assumptions made, matters considered and limits of its review, as set forth in
its opinion, the exchange ratio pursuant to the merger agreement was fair from a
financial point of view to Jupiter stockholders. Following these presentations,
Jupiter's board engaged in a discussion of the terms of the proposed merger,
including the strategic benefits of the combination, the terms and conditions of
the proposed merger agreement and the analyses and opinion of Morgan Stanley.
Following the discussion, the board of directors of Jupiter unanimously approved
the merger agreement and the related agreements and the transactions
contemplated by those agreements, declared them advisable, and resolved to
recommend that Jupiter stockholders vote in favor of the merger agreement.
The Media Metrix board of directors met on June 26, 2000 at Media Metrix'
offices. Mr. Johnson and other members of management presented the board with
the resolution reached on the various open issues. In addition, Thomas Weisel
Partners delivered its oral opinion to the board that the 0.946
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exchange ratio was fair, from a financial point of view, to Media Metrix. Upon
completing its deliberations, the board of directors of Media Metrix unanimously
approved the merger agreement and the related agreements and the transactions
contemplated by those agreements, declared them advisable, and resolved to
recommend that Media Metrix' stockholders vote in favor of the charter amendment
and the issuance of Media Metrix common stock in the merger.
After negotiation of the final terms of the merger agreement and related
agreements, representatives of Media Metrix and representatives of Jupiter
signed the agreements. In addition, certain stockholders of Media Metrix entered
into voting agreements with Jupiter in which they agreed to vote all of their
shares of Media Metrix common stock in favor of adoption of the charter
amendment and common stock issuance, and certain stockholders of Jupiter entered
into voting agreements with Media Metrix in which they agreed to vote all of
their shares of Jupiter common stock in favor of adoption of the merger
agreement.
On the morning of June 27, 2000, Media Metrix and Jupiter issued a joint
press release announcing the signing of the merger agreement.
REASONS FOR THE MERGER; RECOMMENDATIONS OF THE BOARDS OF DIRECTORS
Media Metrix. The Media Metrix board of directors has unanimously approved
the merger agreement, the merger, the amendment to Media Metrix' charter to
increase the number of authorized shares and the proposed issuance of Media
Metrix common stock in the merger, has determined that each of the above is in
the best interest of Media Metrix and its stockholders, and recommends that the
stockholders of Media Metrix vote "FOR" each of the proposals required to
complete the merger. In reaching its determination, the Media Metrix board of
directors consulted with Media Metrix management, as well as Thomas Weisel
Partners and Fried, Frank, Harris, Shriver & Jacobson, and considered the
following important factors that supported the board's recommendation:
- that the merger should create the definitive leader in Internet information
services, with a combined product portfolio that would provide businesses
with a comprehensive suite of resources to understand and profit from the
Internet;
- that the merger should allow the combined enterprise to benefit, over the
long term, from increased financial strength and more alternatives in the
financial markets as compared to either company on a stand-alone basis, and
this should enable the combined enterprise to compete more effectively in
the rapidly growing and changing Internet measurement and analysis
businesses;
- that the companies' common vision, intellectual resources, proven research
methodologies and seasoned management teams should enable the combined
enterprise to launch new business initiatives that anticipate and meet the
accelerating demand for insight into emerging markets, untapped regions,
new technologies, and future industries;
- that the combined enterprise would bring together unique research
methodologies and people producing high quality and innovative products and
services;
- that the combined enterprise should be able to take advantage of
cross-selling opportunities, joint-product development, further
international expansion and other new business initiatives;
- that the merger is expected to be immediately accretive to Media Metrix'
cash flow and earnings from operations.
In its deliberations, the Media Metrix board carefully considered a number
of factors, including the anticipated benefits of the business combination
described above and the following additional factors:
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- the presentation Thomas Weisel Partners made at the June 24, 2000 meeting
of the Media Metrix board of directors, and the opinion of Thomas Weisel
Partners, given at the June 26, 2000 meeting of the board, to the effect
that, as of June 26, 2000, and subject to the assumptions, qualifications
and limitations expressed therein, the exchange ratio was fair, from a
financial point of view, to Media Metrix;
- information concerning the business, earnings, operations, financial
condition and prospects of Media Metrix and Jupiter, both individually and
on a combined basis, including information with respect to the past
earnings performance of each of Media Metrix and Jupiter;
- the recent and past trading prices of Jupiter common stock and Media Metrix
common stock relative to those of other industry participants, and the
potential for appreciation in the value of the Media Metrix common stock
following the merger resulting from opportunities for enhanced revenue
growth and accelerated earnings growth of the combined enterprise;
- the fact that stockholders owning approximately 36% of Media Metrix' common
stock would agree to vote their shares in favor of the transaction;
- the long-term interests of Media Metrix and its stockholders, as well as
the interests of Media Metrix' employees, customers, suppliers and the
communities in which Media Metrix operates;
- the ownership by current Media Metrix stockholders of approximately 55% of
the combined enterprise immediately following the merger;
- that the merger is expected to be a tax-free reorganization for United
States federal income tax purposes; and
- the termination fee payable by Jupiter under certain circumstances,
including the potential effect that the termination fee might have on
competing offers for Jupiter.
The board of directors of Media Metrix also considered a variety of risks
and other potentially negative factors in its deliberations concerning the
merger. In particular, the board of directors of Media Metrix considered:
- the risks associated with integrating the operations of Jupiter with Media
Metrix' existing operations, including the potential loss of key personnel
of Jupiter and difficulty in integrating corporate, accounting, financial
reporting and management information systems of the two companies;
- the risk that a downturn in general economic conditions or a downturn in
investor confidence in the Internet and technology stocks could result in a
reduction of business from or an increase in defaults on payments by "dot
com" companies;
- the risk of diverting management focus and resources from other strategic
opportunities and from operational matters while working to implement the
merger;
- the risks associated with a fixed exchange ratio, including the possibility
that the value of the Media Metrix common stock that the Jupiter
stockholders will receive in the merger could vary depending on changes in
the market price of Media Metrix common stock; and
- the termination fee that would become payable by Media Metrix under certain
circumstances, including the potential effect that the termination fee
might have on competing offers for Media Metrix, and the provisions of the
merger agreement prohibiting Media Metrix from soliciting other offers for
a business combination involving Media Metrix during the term of the merger
agreement.
The board of directors of Media Metrix concluded that the anticipated
benefits of the merger outweighed the possible detriments.
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The discussion is not intended to be exhaustive but includes the material
information and factors considered by the Media Metrix board of directors in its
consideration of the merger. In view of the wide variety of factors considered,
the Media Metrix board of directors did not find it practicable to quantify or
otherwise assign relative weights to the specific factors considered in its
deliberations and made its determination after consideration of all of the
factors as a whole. In addition, individual members of the Media Metrix board of
directors may have given different weights to different factors.
THE MEDIA METRIX BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT MEDIA
METRIX STOCKHOLDERS VOTE "FOR" EACH OF THE PROPOSALS REQUIRED TO COMPLETE THE
MERGER.
Jupiter. The board of directors of Jupiter unanimously concluded that the
merger agreement and the merger are fair and in the best interests of Jupiter
and its stockholders, and determined to recommend that the stockholders adopt
the merger agreement. This decision was based upon several potential benefits of
the merger that Jupiter's board believed would contribute to the success of the
combined enterprise compared to Jupiter's continuing to operate as an
independent business. These included:
- the ability of the combined enterprise to offer a combined product
portfolio that would provide businesses with a comprehensive suite of
resources to understand and profit from the Internet, which presents the
opportunity to create the definitive leader in Internet Information
Services;
- the ability of the two companies to combine their technological resources
to develop new products with increased functionality and bring them to
market faster;
- the ability of the combined enterprise to benefit, over the long term, from
increased financial strength and more alternatives in the financial
markets, and the opportunity this would present for the combined enterprise
to compete more effectively in the rapidly growing and changing Internet
measurement and analysis business;
- the availability to the combined enterprise of greater resources for
product marketing, distribution and international expansion; and
- the possibility that the combined enterprise would be positioned to
capitalize on cross-selling opportunities, joint product development,
further international expansion and other new business initiatives.
In the course of its deliberations regarding the merger, Jupiter's board of
directors reviewed with Jupiter's management and outside advisors a number of
factors relevant to the merger, including the strategic overview and prospects
for Jupiter. Jupiter's board of directors also considered the following
potentially positive factors, among others, in connection with its review and
analysis of the merger. The conclusions of Jupiter's board of directors with
respect to each of these factors supported the board's determination that the
merger is fair to, and in the best interests of, Jupiter's stockholders:
- the fact that the merger would provide Jupiter stockholders with shares of
Media Metrix common stock at a premium over the market price for Jupiter
common stock in an exchange expected to qualify as a tax-free
reorganization;
- historical information concerning Media Metrix' and Jupiter's respective
businesses, financial performance and condition, operations, technology,
management and competitive position;
- current stock market conditions and historical market prices, volatility
and trading information with respect to Media Metrix common stock and
Jupiter common stock, which supported a favorable view of Media Metrix'
stock market presence and positive reputation with investors;
- the belief that the terms of the merger agreement, including the parties'
representations, warranties and covenants, and the conditions to the
parties' respective obligations, are reasonable;
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<PAGE> 58
- the financial analysis and opinion of Morgan Stanley, dated June 26, 2000,
to the Jupiter board of directors to the effect that, as of that date and
based on and subject to the matters described in its opinion, the exchange
ratio was fair, from a financial point of view, to the holders of Jupiter
common stock;
- the impact of the merger on Jupiter's customers and employees; and
- reports from management, legal advisors and financial advisors as to the
results of their due diligence investigation of Media Metrix.
Jupiter's board of directors also considered the terms of the merger
agreement regarding Jupiter's rights and limits on its ability to consider and
negotiate other transaction proposals, as well as the possible effects of the
provisions regarding termination fees. In addition, it was noted by Jupiter's
board that the merger is expected to be accounted for as a purchase, which meant
that significant goodwill and intangible assets were expected to be created on
the books of the combined enterprise as a result of the merger.
The Jupiter board of directors also identified and considered a number of
potentially negative factors in its deliberations concerning the merger,
including the following:
- the risk that, because the exchange ratio will not be adjusted for changes
in the market price of either Media Metrix common stock or Jupiter common
stock, the per share value of the consideration to be received by Jupiter
stockholders might be less than the price per share implied by the exchange
ratio immediately before the announcement of the merger due to fluctuations
in the market value of Media Metrix common stock;
- the risk that the merger might not be completed in a timely manner or at
all;
- the potential negative impact of any customer or supplier defection after
announcement of the proposed merger;
- the challenges relating to the integration of the two companies;
- the risks relating to Media Metrix' business and how they would affect the
operations of the combined enterprise;
- the possibility of management and employee disruption associated with the
merger and integrating the operations of the companies, including the risk
that, despite the efforts of the combined enterprise, key management,
marketing, technical and administrative personnel of Jupiter might not
remain employed with the combined enterprise;
- certain terms of the merger agreement and related agreements that prohibit
Jupiter and its representatives from soliciting third party bids and from
accepting, approving or recommending unsolicited third party bids except in
very limited circumstances, which terms would reduce the likelihood that a
third party would make a bid for Jupiter; and
- the fact that the execution of voting agreements by two executive officers
and directors of Jupiter might reduce the likelihood that a third party
would make a bid for Jupiter.
The foregoing discussion of information and factors considered by the
Jupiter board of directors is not intended to be exhaustive but is believed to
include all material factors considered by the Jupiter board of directors. In
view of the wide variety of factors considered by the Jupiter board of
directors, the Jupiter board of directors did not find it practicable to
quantify or otherwise assign relative weight to the specific factors considered.
In addition, the Jupiter board did not reach any specific conclusion on each
factor considered, but conducted an overall analysis of these factors.
Individual members of the Jupiter board may have given different weight to
different factors. However, after taking into account all of the
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<PAGE> 59
factors set forth above, the Jupiter board of directors unanimously agreed that
the merger is fair to, and in the best interests of, Jupiter's stockholders and
that Jupiter should proceed with the merger.
THE JUPITER BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT JUPITER
STOCKHOLDERS VOTE "FOR" ADOPTION OF THE MERGER AGREEMENT.
In considering the recommendation of Jupiter's board with respect to the
merger agreement, Jupiter stockholders should be aware that certain directors
and officers of Jupiter have interests in the merger that are different from, or
are in addition to, the interests of Jupiter stockholders generally. Please see
"The Merger -- Interests of Directors and Executive Officers of Jupiter in the
Merger" at page 62 for a discussion of the differing and additional interests.
OPINION OF FINANCIAL ADVISOR TO MEDIA METRIX
Thomas Weisel Partners was selected by the Media Metrix board of directors
to act as Media Metrix' financial advisor based on Thomas Weisel Partners'
qualifications, expertise and reputation. Thomas Weisel Partners is a nationally
recognized merchant bank specializing in technology and information services
businesses. At the meeting of the Media Metrix board of directors held on June
26, 2000, Thomas Weisel Partners delivered to the Media Metrix board its oral
opinion, which was subsequently confirmed in writing, that, as of that date and
based upon the assumptions made, matters considered and limits of review set
forth in Thomas Weisel Partners' written opinion, the exchange ratio was fair,
from a financial point of view, to Media Metrix.
Media Metrix determined the exchange ratio to be paid in the merger through
negotiations with Jupiter. Media Metrix did not impose any limitations on Thomas
Weisel Partners with respect to the investigations made or procedures followed
in rendering its opinion.
The full text of Thomas Weisel Partners' written opinion, which sets forth,
among other things, the assumptions made, procedures followed, matters
considered and limitations on the scope of the review undertaken by Thomas
Weisel Partners in delivering its opinion, is attached as Annex D to this
document. You should read this opinion carefully and in its entirety. The
following description of the Thomas Weisel Partners opinion is only a summary of
the written opinion and is qualified by and not a substitute for the written
opinion.
Thomas Weisel Partners directed its opinion to the Media Metrix board of
directors. The opinion does not constitute a recommendation to the stockholders
of Media Metrix as to how they should vote with respect to the merger. The
opinion addresses only the financial fairness of the exchange ratio to be paid
by Media Metrix in the merger. It does not address the relative merits of the
merger or any alternatives to the merger. Further, it does not address the
business decision of the Media Metrix board of directors to proceed with or
effect the merger.
In connection with its opinion, Thomas Weisel Partners, among other things:
- reviewed publicly available financial and other data with respect to Media
Metrix, including the consolidated financial statements for the year ended
December 31, 1999 and the interim period ended March 31, 2000, and other
relevant financial and operating data relating to Media Metrix made
available to Thomas Weisel Partners from published sources and from the
internal records of Media Metrix;
- reviewed the consolidated financial statements of Jupiter for the year
ended December 31, 1999 and the interim period ended March 31, 2000 and
other relevant financial and operating data relating to Jupiter made
available to Thomas Weisel Partners from the internal records of Jupiter;
- reviewed the financial terms and conditions of a draft, dated June 25,
2000, of the merger agreement;
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<PAGE> 60
- reviewed publicly available information concerning the stock market trading
history for Media Metrix common stock and Jupiter common stock;
- compared Jupiter and Media Metrix from a financial point of view with other
Internet-related service companies which Thomas Weisel Partners deemed to
be relevant;
- considered the financial terms, to the extent publicly available, of
selected recent business combinations of Internet-related service companies
which Thomas Weisel Partners deemed to be comparable, in whole or in part,
to the merger;
- reviewed and discussed with representatives of the managements of Jupiter
and Media Metrix information of a business and financial nature regarding
Jupiter and Media Metrix furnished to Thomas Weisel Partners by Jupiter and
Media Metrix, including financial forecasts and related assumptions of
Jupiter and Media Metrix;
- made inquiries regarding and discussed the merger and the merger agreement
and other matters related thereto with Media Metrix' counsel; and
- performed other analyses and examinations as Thomas Weisel Partners deemed
appropriate.
In preparing its opinion, Thomas Weisel Partners assumed and relied on the
accuracy and completeness of all information supplied or otherwise made
available to it and did not assume any responsibility to verify independently
the information referred to above or undertake an independent evaluation,
appraisal or physical inspection of any of the assets or liabilities of Jupiter
or Media Metrix and was not furnished with that kind of valuation or appraisal.
Thomas Weisel Partners also assumed the following:
- with respect to the financial forecasts of Jupiter and Media Metrix
provided to Thomas Weisel Partners by their respective managements, upon
their advice and with their consent, Thomas Weisel Partners assumed that
these forecasts had been reasonably prepared on bases reflecting the best
available estimates and judgments of their respective managements at the
time of preparation as to the future financial performances of Jupiter and
Media Metrix and provided a reasonable basis upon which Thomas Weisel
Partners could form its opinion;
- that there had been no material changes in the assets, financial condition,
results of operations, business or prospects of Jupiter or Media Metrix
since the respective dates of their last financial statements made
available to Thomas Weisel Partners;
- that the merger would be completed in a manner that complies in all
respects with the applicable provisions of the federal securities laws and
all other applicable federal and state statutes, rules and regulations;
- that the merger would be recorded as a purchase under generally accepted
accounting principles; and
- that the merger would be completed in accordance with the terms described
in the June 25, 2000 draft of the merger agreement, without further
amendments thereto, and without any waiver by Media Metrix of any of the
conditions to its obligations thereunder.
The Thomas Weisel Partners opinion was based on economic, monetary, market
and other conditions as in effect on, and the information made available to
Thomas Weisel Partners as of, the date of its opinion. Accordingly, although
subsequent developments may affect its opinion, Thomas Weisel Partners has not
assumed any obligation to update, revise or reaffirm its opinion. In preparing
its opinion, Thomas Weisel Partners relied on the advice of Media Metrix counsel
and independent accountants as to all legal and financial reporting matters with
respect to Media Metrix, the merger and the merger agreement.
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<PAGE> 61
The following is a summary of the financial analyses performed by Thomas
Weisel Partners in connection with preparing its opinion to the Media Metrix
board of directors. Some of the summaries of financial analyses performed by
Thomas Weisel Partners include information presented in tabular format. In order
to fully understand the financial analyses performed by Thomas Weisel Partners,
you should read the tables together with the text of each summary. Considering
the data set forth in the tables without considering the full narrative
description of the financial analyses, including the methodologies and
assumptions underlying the analyses, could create a misleading or incomplete
view of the financial analyses performed by Thomas Weisel Partners.
Public Market Company Analysis
Thomas Weisel Partners compared the valuation multiples implied by the
merger to those of selected publicly-traded market research and Internet
measurement companies. Since there are no directly comparable publicly-traded
companies, Thomas Weisel Partners analyzed companies with similar business
models in three areas: Information Technology (IT) focused research, Web-based
Internet commerce research and Internet measurement. In so doing, Thomas Weisel
Partners did not attach any weight to any category. Thomas Weisel Partners noted
that Jupiter is currently focused on the analysis of Internet related trends.
The companies included in each category are:
<TABLE>
<CAPTION>
IT Focused Research Web-Based Internet Commerce Research Internet Measurement
------------------- ------------------------------------ --------------------
<S> <C> <C>
Gartner Group Forrester Research @Plan
Giga Information Group Media Metrix
Meta Group NetRatings
</TABLE>
For each of these companies, Thomas Weisel Partners calculated the
multiples of enterprise value to estimates of total revenues for the fiscal
years 1999 through 2001, enterprise value to estimates of earnings before
interest, taxes, depreciation and amortization (EBITDA) and operating income
(EBIT) for 2000 and 2001, and equity value to estimates of net income before
goodwill (P/E Ratio) for 2001. For purposes of this analysis, Thomas Weisel
Partners defined enterprise value as equity value plus total debt less cash and
cash equivalents, and calculated equity value on the basis of closing stock
prices on June 26, 2000. Estimated revenues for the comparable companies were
derived from equity research reports published by investment banks. Thomas
Weisel Partners then compared the mean and median multiples of enterprise value
to revenue, EBITDA and operating income estimates for fiscal years 2000 and 2001
and the mean and median multiples of equity value to net income before goodwill
amortization to the multiples of Jupiter implied by the consideration to be
received in the merger as follows:
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<PAGE> 62
<TABLE>
<CAPTION>
Web-Based
Internet
IT Focused Commerce Internet
Research Research Measurement Jupiter
----------- --------- ----------- -------
<S> <C> <C> <C> <C>
Enterprise Value /
------------------
Actual 1999 Revenues 1.6x - 1.7x 20.6x 16.3x(1) 11.2x
Estimated 2000 Revenues 1.3x - 1.4x 12.5x 10.0x - 15.5x 4.8x
Estimated 2001 Revenues 1.2x(1) 8.2x 6.9x - 8.3x 3.0x
Estimated 2000 EBITDA 9.4x(1) 59.7x NM 67.2x
Estimated 2001 EBITDA NM 38.3x 689.1x (1) 21.5x
Estimated 2000 Operating income 17.0x(1) 75.0x NM 210.2x
Estimated 2001 Operating income NM 47.0x 78.0x(1) 29.4x
Equity Value /
------------------
Estimated 2000 Net income before
Goodwill NM NM NM 103.3x
Estimated 2001 Net income before
Goodwill 12.7x(1) 75.8x 98.9x (1) 37.8x
</TABLE>
------------
(1) Mean and median multiples were the same.
Premiums Paid Analysis
Thomas Weisel Partners reviewed the premiums paid by the acquiror in
selected Internet merger transactions to the closing stock price one day prior
to, the closing stock price one week prior to, and the closing stock price one
month prior to, the announcement of each transaction.
The Internet transactions selected for this analysis were transactions with
an implied target company enterprise value less than one billion dollars, as
follows:
<TABLE>
<CAPTION>
Announcement Date Name of Acquiror Name of Target
----------------- ---------------- --------------
<S> <C> <C>
6/8/00 Earthlink OneMain.com
4/17/00 MyPoints.com Cybergold
3/16/00 eGain Communications Inference
2/29/00 24/7 Media Exactis.com
2/10/00 CMGI uBid.com
12/20/99 Interpublic NFO
12/15/99 CMGI Yesmail.com
12/7/99 RoweCom, Inc. NewsEdge
11/8/99 Prodigy Flashnet
11/4/99 CoStar Comps.com
10/26/99 Bamboo.com IPIX
10/21/99 Critical Path Isocor
10/7/99 Intuit Rock Financial
9/30/99 CMGI Flycast
9/20/99 CMGI Adforce
7/13/99 Excite@Home iMall
</TABLE>
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<TABLE>
<CAPTION>
Announcement Date Name of Acquiror Name of Target
----------------- ---------------- --------------
<S> <C> <C>
7/13/99 DoubleClick NetGravity
6/25/99 AnswerThink ThinkNewIdeas
6/23/99 Multex MarketGuide
6/14/99 DoubleClick Abacus
2/1/99 America Online MovieFone
10/23/98 CDnow N2K
9/2/98 USWeb CKS Group
</TABLE>
The range of premiums paid by acquirors to the closing stock price one-day
prior to, one-week prior to, and one-month prior to, the announcement of each
transaction was compared with the implied premiums to be paid by Media Metrix
for Jupiter in the merger as follows:
<TABLE>
<CAPTION>
Range of Premiums
----------------------------------------------
Internet Transactions
Less Than $1 Billion Jupiter
--------------------- -------
<S> <C> <C>
Premium to Target Stock Price One-Day Prior to
Announcement..................................... (13%) - 132% 16%
Premium to Target Stock Price One-Week Prior to
Announcement..................................... (13%) - 156% 11%
Premium to Target Stock Price One-Month Prior to
Announcement..................................... (50%) - 163% 32%
</TABLE>
Relative Acquisition Multiple of Revenue Paid
Thomas Weisel Partners compared the implied revenue multiples paid by the
acquiror in selected acquisitions of technology research and Internet
measurement companies to the revenue multiple paid by Media Metrix. The target's
implied revenue multiple, based upon the transaction enterprise value, was then
divided by the acquiror's then currently traded revenue multiple to determine
the relative percentage paid, in terms of revenue multiple, by the acquiror in
the selected transactions.
The transactions involving technology research companies that were selected
for this analysis were:
<TABLE>
<CAPTION>
Announcement Date Name of Acquiror Name of Target
----------------- ---------------- --------------
<S> <C> <C>
5/9/00 Reuters Group PLC Yankee Group (Primark)
2/28/00 Jupiter Net Market Makers
2/28/00 Jupiter Internet Research Group
12/20/99 Interpublic Group NFO Worldwide
11/15/99 Forrester Research Fletcher Research
10/20/98 META Group The Sentry Group
9/4/98 GartnerGroup Vision Events International
5/18/98 GartnerGroup The Research Board
1/30/98 GartnerGroup Interpose
12/10/97 IPSOS Group SA ASI Market Research
10/22/97 GartnerGroup Jupiter
8/1/97 GartnerGroup Datapro Information Services
2/26/97 IntelliQuest Information Group Zona Research
</TABLE>
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<PAGE> 64
<TABLE>
<S> <C> <C>
8/9/96 Primark Corp. Yankee Group
12/1/95 GartnerGroup Dataquest
</TABLE>
The transactions involving Internet measurement companies that were
selected for this analysis were:
<TABLE>
<CAPTION>
Announcement Date Name of Acquiror Name of Target
----------------- ---------------- --------------
<S> <C> <C>
10/7/99 Macromedia Andromedia
10/6/99 Media Metrix AdRelevance
10/12/98 Media Metrix Relevant Knowledge
</TABLE>
Based upon the aforementioned methodology, the relative revenue multiple
paid analysis is as follows:
<TABLE>
<CAPTION>
Technology Internet
Research Measurement
Transactions Transactions Jupiter
------------ ------------ -------
<S> <C> <C> <C>
Target Revenue Multiple as % of Acquiror's 44.3% - 56.0% NA 43.6%
Revenue Multiple (mean and median
percentages)
</TABLE>
Contribution Analysis
Based on the number of fully-diluted shares outstanding as of June 26,
2000, following the merger, Jupiter stockholders and Media Metrix stockholders
will own approximately 45% and 55%, respectively, of the combined enterprise.
Using estimates prepared by Wall Street equity research analysts, Thomas Weisel
Partners calculated the estimated contribution by Media Metrix and Jupiter to
revenue, gross profit, EBITDA, operating income and net income before goodwill
of the combined enterprise for the fiscal years 2000 and 2001. In light of the
negative EBITDA projected for fiscal year 2000 for Media Metrix, Thomas Weisel
Partners focused on EBITDA contributions for fiscal year 2001.
Thomas Weisel Partners then compared these relative contributions to the
relative contributions of Media Metrix and Jupiter to the combined enterprise's
enterprise value, which Thomas Weisel Partners defined for purposes of this
analysis as equity value plus total debt minus cash, and equity value calculated
on the basis of closing stock prices on June 26, 2000.
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<PAGE> 65
This analysis yielded the following relative contributions:
<TABLE>
<CAPTION>
Media Metrix Jupiter
------------ -------
<S> <C> <C>
Estimated Revenues
2000.................................................... 35% 65%
2001.................................................... 33% 67%
Estimated Gross Profit
2000.................................................... 34% 66%
2001.................................................... 36% 64%
Estimated EBITDA
2000.................................................... NM NM
2001.................................................... 3% 97%
Estimated Operating Income
2000.................................................... NM NM
2001................................................... NM NM
Estimated Net Income before Goodwill
2000................................................... NM NM
2001................................................... 20% 80%
Aggregate Equity Value (at Market)..................... 59% 41%
Aggregate Equity Value (at Deal Price).................. 55% 45%
Aggregate Enterprise Value (at Market).................. 57% 43%
Aggregate Enterprise Value (at Deal Price).............. 53% 47%
</TABLE>
Pro Forma Merger Analysis
Thomas Weisel Partners reviewed the pro forma effects of the merger on the
combined enterprise's earnings per share, utilizing financial forecasts for
Jupiter and Media Metrix provided by investment banking equity research analysts
and not taking into account any merger-related cost savings or revenue
enhancements. This analysis adjusts for the intrinsic value of Jupiter's
unvested options and amortizes the resulting transaction goodwill over a period
of five years.
This analysis indicated that the impact of the merger on the combined
enterprise's earnings per share before taking into account goodwill and deferred
compensation would be accretive in 2000 and 2001. On this basis, the pro forma
earnings per share accretion or dilution is as follows:
<TABLE>
<CAPTION>
Year Per Share Accretion
---- -------------------
<S> <C>
2000 $0.11
2001 $0.25
</TABLE>
This analysis further indicated that the impact of the merger on the
combined enterprise's earnings per share taking into account goodwill and
deferred compensation, would be dilutive in each year analyzed. On this basis,
the pro forma earnings per share accretion or dilution is as follows:
<TABLE>
<CAPTION>
Year Per Share Dilution
---- -------------------
<S> <C>
2000 ($0.51)
2001 ($1.58)
</TABLE>
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The foregoing description is only a summary of the analyses and
examinations that Thomas Weisel Partners deems material to its opinion. The
preparation of a fairness opinion necessarily is not susceptible to partial
analysis or summary description. Thomas Weisel Partners believes that its
analyses and the summary set forth above must be considered as a whole and that
selecting portions of its analyses and of the factors considered, without
considering all analyses and factors, would create an incomplete view of the
process underlying the analyses set forth in its presentation to the Media
Metrix board of directors. In addition, Thomas Weisel Partners may have given
various analyses more or less weight than other analyses, and may have deemed
various assumptions more or less probable than other assumptions. The fact that
any specific analysis has been referred to in the summary above is not meant to
indicate that this analysis was given greater weight than any other analysis.
Accordingly, the ranges of valuations resulting from any particular analysis
described above should not be taken to be the view of Thomas Weisel Partners
with respect to the actual value of Media Metrix or Jupiter.
In performing its analyses, Thomas Weisel Partners made numerous
assumptions with respect to industry performance, general business and economic
conditions and other matters, many of which are beyond the control of Media
Metrix and Jupiter. The analyses performed by Thomas Weisel Partners are not
necessarily indicative of actual values or actual future results, which may be
significantly more or less favorable than those suggested by these analyses.
These analyses were prepared solely as part of the analysis performed by Thomas
Weisel Partners with respect to the financial fairness of the consideration to
be paid by Media Metrix pursuant to the merger, and were provided to Media
Metrix in connection with the delivery of the Thomas Weisel Partners opinion.
The analyses do not purport to be appraisals or to reflect the prices at which a
company might actually be sold or the prices at which any securities may trade
at any time in the future.
In the ordinary course of its business, Thomas Weisel Partners actively
trades the equity securities of both Media Metrix and Jupiter for its own
account and for the accounts of customers and, accordingly, may at any time hold
a long or short position in these securities. Thomas Weisel Partners also acted
as underwriter in connection with public offerings of both Media Metrix' and
Jupiter's securities and has performed various investment banking services for
Media Metrix and its affiliates, for which Thomas Weisel Partners received
customary compensation.
Fee Arrangements of Thomas Weisel Partners
Under its engagement letter dated May 3, 2000, Media Metrix agreed to pay
Thomas Weisel Partners a fee equal to 1.0% of the merger's aggregate value, of
which an amount equal to 0.15% of the merger's aggregate value was payable upon
delivery of its opinion, and the balance is payable upon the completion of the
merger. Media Metrix also agreed to reimburse Thomas Weisel Partners for its
reasonable out-of-pocket expenses and to indemnify Thomas Weisel Partners, its
affiliates, and their respective partners, directors, officers, agents,
consultants, employees and controlling persons against specific liabilities,
including liabilities under the federal securities laws.
OPINION OF FINANCIAL ADVISOR TO JUPITER
Under an engagement letter dated May 5, 2000, Jupiter retained Morgan
Stanley to provide it with financial advisory services and a financial fairness
opinion in connection with the merger. Morgan Stanley was selected by Jupiter
based on Morgan Stanley's qualifications, expertise, reputation and its
knowledge of the business and affairs of Jupiter. At the meeting of the board of
directors of Jupiter on June 26, 2000, Morgan Stanley rendered its oral opinion,
subsequently confirmed in writing, that as of June 26, 2000, based upon and
subject to the various considerations set forth in the opinion, the exchange
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ratio pursuant to the merger agreement was fair from a financial point of view
to the holders of shares of Jupiter common stock.
The full text of the written opinion of Morgan Stanley dated June 26, 2000
is attached as Annex E to this joint proxy statement/prospectus. The opinion
sets forth, among other things, the assumptions made, procedures followed,
matters considered and limitations on the scope of the review undertaken by
Morgan Stanley in rendering its opinion. We urge you to read the entire opinion
carefully. Morgan Stanley's opinion is directed to the board of directors of
Jupiter and addresses only the fairness of the exchange ratio under the merger
agreement from a financial point of view to the holders of shares of Jupiter
common stock as of the date of the opinion. It does not address any other aspect
of the merger and does not constitute a recommendation to any holder of Jupiter
common stock as to how to vote at the Jupiter special stockholders meeting. The
summary of the opinion of Morgan Stanley set forth in this joint proxy
statement/prospectus is qualified in its entirety by reference to the full text
of its opinion.
In rendering its opinion, Morgan Stanley, among other things:
- reviewed certain publicly-available financial statements and other
information of Jupiter and Media Metrix;
- reviewed certain internal financial statements and other financial and
operating data concerning Jupiter and Media Metrix, prepared by the
managements of Jupiter and Media Metrix, respectively;
- reviewed certain financial projections of Jupiter and Media Metrix,
prepared by the managements of Jupiter and Media Metrix, respectively;
- discussed the past and current operations and financial condition and the
prospects of Jupiter and Media Metrix with senior executives of Jupiter and
Media Metrix, respectively;
- reviewed the pro forma impact of the merger on Media Metrix' earnings per
share and income;
- reviewed potential strategic, financial and operational benefits
anticipated from the merger, prepared by the managements of Jupiter and
Media Metrix, with senior executives of Jupiter and Media Metrix;
- reviewed the reported prices and trading activity for Jupiter common stock
and Media Metrix common stock;
- compared the financial performance of Jupiter and Media Metrix and the
prices and trading activity of Jupiter common stock and Media Metrix common
stock with that of certain other comparable publicly-traded companies and
their securities;
- reviewed the financial terms, to the extent publicly available, of certain
comparable acquisition transactions;
- participated in discussions and negotiations among representatives of
Jupiter and Media Metrix and their financial and legal advisors;
- reviewed the draft merger agreement and certain related documents; and
- considered such other factors and performed such other analyses as Morgan
Stanley deemed appropriate.
Morgan Stanley assumed and relied upon, without independent verification,
the accuracy and completeness of the information reviewed by it for the purposes
of its opinion. With respect to the financial projections, including information
relating to certain strategic, financial and operational benefits anticipated
from the merger, Morgan Stanley assumed that they were reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
future financial performance and
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prospects of Jupiter and Media Metrix. Morgan Stanley relied upon the assessment
by the managements of Jupiter and Media Metrix of their ability to retain key
employees of Jupiter. Morgan Stanley also relied upon, without independent
verification, the assessment by the management of Jupiter of Jupiter's services
and products, the timing and risks associated with the integration of Jupiter
with Media Metrix, and the validity of, and risks associated with, Jupiter's
existing and future services and products. In addition, Morgan Stanley assumed
that the merger would be completed in accordance with the terms set forth in the
merger agreement, including, among other things, that the merger would be
treated as a tax-free reorganization pursuant to the Internal Revenue Code.
Morgan Stanley did not make any independent valuation or appraisal of the assets
or liabilities of Jupiter or Media Metrix, nor has Morgan Stanley been furnished
with any such appraisals. Morgan Stanley's opinion is necessarily based on
financial, economic, market and other conditions as in effect on, and the
information made available to it as of, the date of its opinion.
The following is a brief summary of certain analyses performed by Morgan
Stanley in connection with its opinion dated June 26, 2000. Certain of these
summaries of financial analyses include information presented in tabular format.
In order to fully understand the financial analyses used by Morgan Stanley, the
tables must be read together with the text of each summary. The tables alone do
not constitute a complete description of the financial analyses.
In rendering its financial opinion, Morgan Stanley relied upon both
companies' outstanding share information as of June 23, 2000. Based on this
outstanding share information, the exchange ratio was 0.944, which was used in
Morgan Stanley's analyses. On June 26, 2000 the outstanding share information
was revised and resulted in an exchange ratio in the merger of 0.946.
Contribution Analysis
Morgan Stanley analyzed the relative contribution of Jupiter and Media
Metrix to historical and estimated revenues, gross profit and market values of
the combined enterprise for fiscal years 1999 to 2001 based on publicly
available estimates from securities research analysts. Morgan Stanley's
contribution analysis assumed no synergies. The following table presents the
results of that analysis:
<TABLE>
<CAPTION>
% Contribution
------------------------
Jupiter Media Metrix
------- ------------
<S> <C> <C>
Revenues
FY1999A 65.0% 35.0%
FY2000E 65.2 34.8
FY2001E 67.0 33.0
Gross Profit
FY1999A 67.5 32.5
FY2000E 65.7 34.3
FY2001E 64.2 35.8
Market Values
June 23, 2000 41.7 58.3
</TABLE>
Morgan Stanley noted that based on an implied exchange ratio of 0.944 on
June 23, 2000, the pro forma ownership of Jupiter in the combined enterprise was
45.0%.
Comparable Company Analysis
Morgan Stanley compared selected financial information for Jupiter and
Media Metrix with publicly available information for comparable software
companies, including NetRatings, Forrester Research, Gartner Group, Inc. and
META Group. Based upon calendar year 2000 and 2001 projected revenue estimates
from securities research analysts and using the closing prices as of June 23,
2000, Morgan
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Stanley calculated, for each of these companies, the multiple of aggregate value
to projected calendar year 2000 and 2001 revenues. The following table shows the
results of these calculations:
<TABLE>
<CAPTION>
Aggregate Value/
---------------------------------------
CY2000E Revenues CY2001E Revenues
---------------- ----------------
<S> <C> <C>
NetRatings 33.8x 15.4x
Forrester Research 10.8 7.1
Media Metrix 10.4 7.2
Jupiter 4.0 2.6
Gartner Group, Inc. 1.5 1.3
META Group 1.5 1.2
</TABLE>
Morgan Stanley noted that the multiple of aggregate value to calendar year
2000 and 2001 revenues implied by the exchange ratio set forth in the merger
agreement would be 4.7x and 3.0x.
No company included in the comparable company analyses is identical to
Jupiter or Media Metrix. In evaluating the comparable companies, Morgan Stanley
made judgments and assumptions with regard to industry performance, general
business, economic, market and financial conditions and other matters. Many of
these matters are beyond the control of Jupiter or Media Metrix, such as the
impact of competition on the business of Jupiter or Media Metrix and the
industry in general, industry growth and the absence of any material adverse
change in the financial condition and prospects of Jupiter or Media Metrix or
the industry or in the financial markets in general. Mathematical analysis, such
as determining the average or median, is not in itself a meaningful method of
using comparable company data.
Offer Price Premium Analysis
Morgan Stanley reviewed the average closing price of Jupiter common stock
over various periods ending June 23, 2000. Morgan Stanley examined the premiums
represented by the offer price on June 23, 2000 implied by the exchange ratio
set forth in the merger agreement over the averages of these closing prices over
various periods and found them to be as follows:
<TABLE>
<CAPTION>
Period Ending Period Average Jupiter Closing Premium of Offer Price to Period
June 23, 2000 Share Price Average Share Price
------------- ------------------------------ --------------------------------
<S> <C> <C>
June 23, 2000 $24.19 13.6%
Prior 10 trading days 23.98 14.6
Prior 20 trading days 23.44 17.3
Prior 30 trading days 22.93 19.8
Prior 45 trading days 24.04 14.3
</TABLE>
Exchange Ratio Premium Analysis
Morgan Stanley reviewed the ratios of the closing prices of Jupiter common
stock divided by the corresponding closing prices of Media Metrix common stock
over various periods ending June 23, 2000. These ratios are referred to as
period average exchange ratios. Morgan Stanley examined the premiums represented
by the exchange ratio of 0.944 over the averages of these period average
exchange ratios over various periods, and found them to be as follows:
<TABLE>
<CAPTION>
Period Ending Period Average Premium to Period
June 23, 2000 Exchange Ratio Average Exchange Ratio
------------- ------------------------------ --------------------------------
<S> <C> <C>
June 23, 2000 .830 13.6%
Prior 10 trading days .753 25.3
</TABLE>
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<TABLE>
<CAPTION>
Period Ending Period Average Premium to Period
June 23, 2000 Exchange Ratio Average Exchange Ratio
------------- ------------------------------ --------------------------------
<S> <C> <C>
Prior 20 trading days .749 25.9
Prior 30 trading days .762 23.8
Prior 45 trading days .791 19.3
</TABLE>
Pro Forma Analysis
Morgan Stanley analyzed the pro forma impact of the merger on earnings per
share for Jupiter and Media Metrix for fiscal year 2001. The pro forma results
were calculated based on publicly available earnings estimates from securities
research analysts for Jupiter and Media Metrix. The pro forma analysis also took
into account the cash earnings per share. Morgan Stanley noted that the merger
would be accretive to Media Metrix earnings per share in fiscal 2001 and
dilutive to Jupiter earnings per share in fiscal 2001.
Pro Forma Revenue Growth
Morgan Stanley performed an analysis of the pro forma impact of the merger
on revenue growth for both companies for fiscal year 2001. The pro forma results
were calculated based on publicly available revenue estimates from securities
research analysts for Jupiter and Media Metrix. The pro forma analysis also took
into account the 10% revenue synergies expected from the merger. Morgan Stanley
noted that the merger would be accretive to both companies' revenue growth rates
in fiscal 2001.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. In
arriving at its opinion, Morgan Stanley considered the results of all of its
analyses as a whole and did not attribute any particular weight to any
particular analysis or factor considered by it. Furthermore, Morgan Stanley
believes that selecting any portion of Morgan Stanley's analyses, without
considering all its analyses, would create an incomplete view of the process
underlying Morgan Stanley's opinion. In addition, Morgan Stanley may have given
various analyses and factors more or less weight than other analyses and factors
and may have deemed various assumptions more or less probable than other
assumptions, so that the range of valuations resulting from any particular
analysis described above should not be taken to be Morgan Stanley's view of the
actual value of Jupiter or Media Metrix.
In performing its analyses, Morgan Stanley made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Jupiter or Media Metrix.
Any estimates contained in Morgan Stanley's analysis are not necessarily
indicative of future results or actual values, which may be significantly more
or less favorable than those suggested by such estimates. The analyses performed
were prepared solely as part of Morgan Stanley's analysis of the fairness of the
exchange ratio under the merger agreement from a financial point of view to the
holders of shares of Jupiter common stock and were conducted in connection with
the delivery of the Morgan Stanley opinion to the board of directors of Jupiter.
The analyses do not purport to be appraisals or to reflect the prices at which
Jupiter common stock or Media Metrix common stock might actually trade. The
exchange ratio under the merger agreement and the other terms of the merger
agreement were determined through arm's length negotiations between Jupiter and
Media Metrix and were approved by the board of directors of Jupiter. In arriving
at its opinion, Morgan Stanley was not authorized to solicit, and did not
solicit, interest from any party with respect to the merger, nor did it
negotiate with any of the parties, other than Media Metrix, which expressed
interest to Morgan Stanley in the possible merger with Jupiter. Morgan Stanley
provided advice to Jupiter during such negotiations; however, Morgan Stanley did
not recommend any specific consideration to Jupiter or that any specific
consideration constituted the only appropriate consideration for the merger. In
addition, as described above, Morgan Stanley's opinion
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and presentation to the board of directors of Jupiter was one of many factors
taken into consideration by the board of directors of Jupiter in making its
decision to approve the merger. Consequently, the Morgan Stanley analyses as
described above should not be viewed as determinative of the opinion of the
board of directors of Jupiter with respect to the value of Media Metrix or of
whether the board of directors of Jupiter would have been willing to agree to a
different consideration.
Morgan Stanley is an internationally recognized investment banking and
advisory firm. Morgan Stanley, as part of its investment banking and financial
advisory business, is continuously engaged in the valuation of businesses and
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for corporate and other
purposes. In the ordinary course of Morgan Stanley's trading and brokerage
activities, Morgan Stanley or its affiliates may at any time hold long or short
positions, trade or otherwise effect transactions, for its own account or for
the account of customers, in the equity or debt securities or senior loans of
Jupiter or Media Metrix.
Fee Arrangements of Morgan Stanley
Pursuant to an engagement letter dated May 5, 2000, Morgan Stanley provided
financial advisory services and a financial opinion in connection with the
merger, and Jupiter agreed to pay Morgan Stanley a fee in connection therewith
equal to 1% of the merger's aggregate value, with a minimum fee of $5 million.
Of the fee, $1 million became payable to Morgan Stanley upon the execution and
public announcement of the merger agreement and the balance will become payable
upon completion of the merger. Jupiter has also agreed to reimburse Morgan
Stanley for its expenses incurred in performing its services. In addition,
Jupiter has agreed to indemnify Morgan Stanley and its affiliates, their
respective directors, officers, agents and employees and each person, if any,
controlling Morgan Stanley or any of its affiliates against certain liabilities
and expenses, including certain liabilities under the federal securities laws,
related to or arising out of Morgan Stanley's engagement and any related
transactions.
INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS OF JUPITER IN THE MERGER
When you consider the recommendations of our boards of directors, you
should be aware that some directors and executive officers of Jupiter have
interests in the merger that are different from, or in addition to, your
interests. These interests may create potential conflicts of interest. The
Jupiter directors were aware of these interests when they approved the merger
and the merger agreement.
Continuing Directors; Executive Officers
Under the merger agreement, four of the existing directors of Jupiter will
be appointed to the board of Jupiter Media Metrix and, upon any vacancy in a
Jupiter designee's board seat, the remaining Jupiter designees will collectively
have the right to select his or her replacement. Three of the executive officers
of Jupiter are also being appointed as executive officers of Jupiter Media
Metrix. In addition, each of the other executive officers of Jupiter is expected
to continue to serve in the same capacity with the Jupiter Communications
divisions of Jupiter Media Metrix after the merger. Please see "Board of
Directors and Executive Officers of Jupiter Media Metrix After the Merger" on
page 66 for more details about these appointments.
Employment Agreements
Prior to the merger, Jupiter will enter into employment agreements with
Gene DeRose, Kurt Abrahamson and Jean Robinson. Each of these agreements will
provide for a three-year term commencing on the effective date of the merger. In
addition, the agreements will provide for the following with respect to the
executive's position, base salary, bonus, and grant of an option to purchase
shares of Jupiter common stock, as of the effective date of the merger:
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<PAGE> 72
<TABLE>
<CAPTION>
NAME POSITION BASE SALARY BONUS OPTION GRANT
---- -------- ----------- ----- ------------
<S> <C> <C> <C> <C>
Gene DeRose President of Jupiter $240,000 Up to 40% of base salary 45,000
Media Metrix (25% guaranteed)
Kurt Abrahamson Co-Chief Operating $200,000 Up to 40% of base salary 45,000
Officer of Jupiter (25% guaranteed)
Media Metrix
Jean Robinson Executive Vice $195,000 Up to 40% of base salary 25,000
President, Business
Development, of
Jupiter Media Metrix
</TABLE>
The option grants will become exercisable as to 25% of the shares subject
to the option on the first anniversary of the date of grant, and, as to the
balance, in monthly increments over the three years following the first
anniversary of the date of grant. The option will convert into options to
acquire shares of Media Metrix common stock upon completion of the merger.
Please see "Jupiter Stock Options" at page 64 for a discussion of the treatment
of Jupiter stock options in the merger.
Each of the agreements provides that the employment of the executive may be
terminated by Jupiter Media Metrix or by the executive at any time. If Jupiter
Media Metrix terminates the executive's employment without cause during the term
of the agreement, or if the executive terminates his or her employment for good
reason during the term of the agreement, then the executive will be entitled to
the following severance payments and benefits:
- any accrued but unpaid compensation;
- continued salary and continued health coverage under the same conditions as
exist at the time of termination for the longer of 18 months or the
unexpired term of the agreement;
- accelerated exercisability of the stock options granted pursuant to the
employment agreement and any stock options that may be granted after the
effective date of the merger; and
- as to any options the exercisability of which accelerates, a
post-termination exercise period of one year.
For purposes of these agreements, "good reason" includes material breaches
of the employment agreement by Jupiter Media Metrix, reduction in the
executive's duties or responsibilities, including reporting responsibilities,
and a relocation of the executive's worksite outside of New York County.
The agreements also contain customary provisions regarding confidentiality,
non-solicitation, the assignment of inventions and non-competition.
Indemnification and Insurance
Media Metrix has agreed that all rights to exculpation and indemnification
for acts or omissions occurring at or prior to the merger which now exist in
favor of the current or former directors or officers of Jupiter or any of its
subsidiaries under Jupiter's certificate of incorporation or bylaws or any
contract disclosed to Media Metrix will continue in effect following the merger
in accordance with their terms. Media Metrix has also agreed, for six years
after the merger, to indemnify the current and former directors and officers of
Jupiter or any of its subsidiaries for their acts or omissions occurring at or
prior to the merger to the fullest extent permitted by applicable law. In
addition, Media Metrix has agreed to use its reasonable best efforts to
maintain, for six years after the merger, Jupiter's current directors' and
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officers' liability insurance covering those persons currently covered by that
insurance policy. As a result of these arrangements, the current directors and
officers of Jupiter may be entitled to payment or reimbursement of their costs
and expenses, including amounts paid under court judgments or settlements and
legal fees and expenses, in connection with claims and law suits arising out of
their activities before the merger, including their activities relating to the
approval of the merger agreement and the merger. Please see "The Merger
Agreement -- Indemnification and Insurance" on page 74.
Jupiter Stock Options
As of the close of business on [_____ __], 2000, Jupiter's directors and
executive officers held stock options to purchase an aggregate of [_______]
shares of Jupiter common stock at exercise prices ranging from $[ ] to $[ ] per
share. Under the terms of the merger agreement, all Jupiter options, including
those held by directors and executive officers, outstanding immediately prior to
the merger will automatically be converted into options to purchase shares of
Media Metrix common stock. Options held by Jupiter's non-employee directors,
which totaled [_______] at [_____ __], 2000, are currently exercisable but the
shares issuable upon exercise of the options are subject to a right of
repurchase in favor of Jupiter. Upon completion of the merger, this right of
repurchase will lapse and any unexercised options will become fully vested.
Media Metrix Stock Options
Under the existing terms of the Media Metrix 2000 Equity Incentive Plan,
the two non-employee Jupiter directors will each be granted an option to
purchase 15,000 shares of Media Metrix common stock upon joining the Media
Metrix board of directors at the completion of the merger. The options will have
an exercise price equal to the fair market value of the common stock on the date
of grant.
ACCOUNTING TREATMENT
The merger will be accounted for as a purchase for financial reporting and
accounting purposes. After the completion of the merger, the results of
operations of Jupiter will be included in the consolidated financial statements
of Media Metrix. The purchase price will be allocated to Jupiter's assets and
liabilities based on the fair values of the assets acquired and the liabilities
assumed. Any excess of cost over the fair value of the net tangible assets of
Jupiter acquired will be recorded as goodwill and other intangible assets and
will be amortized by charges to operations under generally accepted accounting
principles. These allocations will be made based upon valuations and other
studies that have not yet been finalized.
FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of certain material federal income tax
consequences of the merger to Media Metrix, Jupiter and the holders of Jupiter
common stock who are citizens or residents of the United States or who are
domestic corporations. This discussion is for general information only and does
not purport to address all tax consequences of the merger or tax consequences
that are generally assumed to be known by investors. The summary may not apply
to stockholders in special situations, such as dealers in securities or
currencies, traders in securities, financial institutions, tax-exempt
organizations, insurance companies, persons holding shares of Jupiter common
stock as part of a hedging, "straddle," conversion or other integrated
transaction, non-United States persons, persons whose functional currency is not
the United States dollar and persons who acquired their shares of Jupiter common
stock pursuant to the exercise of employee stock options, or otherwise as
compensation. The discussion assumes that the shares of Jupiter common stock are
held as capital assets. In addition, no information is provided as to the tax
consequences of the merger under any foreign, state or local laws.
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Neither Jupiter nor Media Metrix has requested a ruling from the Internal
Revenue Service with regard to any of the federal income tax consequences of the
merger, and the opinions of counsel described below to be delivered as
conditions to the merger will not be binding on the IRS. There can be no
assurance that the IRS or the courts will not take a contrary view.
Tax Opinions. As conditions to the merger, which Media Metrix and Jupiter
have agreed will not be waived, Media Metrix must receive an opinion of Fried,
Frank, Harris, Shriver & Jacobson, counsel to Media Metrix, and Jupiter must
receive an opinion of Brobeck, Phleger & Harrison, counsel to Jupiter, subject
to the assumptions and qualifications described below, to the effect that, based
upon federal income tax law then in effect, the merger will qualify as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code. These opinions will be based on, among other things:
- certain representations and statements of Media Metrix and Jupiter;
- the assumption that such representations and statements will be complete
and accurate as of the effective time of the merger; and
- the assumption that the merger and related transactions will take place in
accordance with all of the terms of the merger agreement and as described
in this joint proxy statement/prospectus.
Federal Income Tax Consequences. Assuming that the merger qualifies as a
reorganization, the federal income tax consequences of the merger will be as
follows:
- none of Jupiter, Media Metrix or MMX Acquisition Corp. will recognize gain
or loss as a result of the merger;
- Jupiter stockholders who exchange their shares of Jupiter common stock for
shares of Media Metrix common stock will not recognize gain or loss as a
result of the merger, except with respect to cash received instead of a
fractional share of Media Metrix common stock;
- the tax basis of the shares of Media Metrix common stock received by the
Jupiter stockholders in exchange for their Jupiter common stock in the
merger will be the same as the tax basis of the shares of Jupiter common
stock surrendered in exchange for those shares;
- the holding period of the shares of Media Metrix common stock received in
the merger will include the holding period of the shares of Jupiter common
stock surrendered in the exchange; and
- a holder of Jupiter common stock that receives cash instead of a fractional
share of Media Metrix common stock will, in general, recognize capital gain
or loss equal to the difference between the cash amount received and the
portion of the holder's tax basis in shares of Jupiter common stock
allocable to the fractional share; this gain or loss will be long-term
capital gain or loss for federal income tax purposes if the holder's
holding period in the Jupiter common stock exchanged for the fractional
share of Media Metrix common stock is more than one year.
THE PRECEDING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF CERTAIN FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER AND DOES NOT PURPORT TO BE A COMPLETE
ANALYSIS OR DISCUSSION OF ALL POTENTIALLY RELEVANT TAX EFFECTS. JUPITER
STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX
CONSEQUENCES OF THE MERGER TO THEM, INCLUDING TAX RETURN REPORTING REQUIREMENTS,
THE APPLICABILITY AND EFFECTS OF FEDERAL, STATE, LOCAL AND OTHER TAX LAWS AND
THE EFFECTS OF ANY PROPOSED CHANGES IN THE TAX LAWS.
REGULATORY MATTERS
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the
rules promulgated under that Act by the Federal Trade Commission, in order to
complete the merger we were required to give
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notification and furnish information relating to the Jupiter and Media Metrix
businesses and the industries in which they operate to the Federal Trade
Commission and the Antitrust Division of the United States Department of
Justice, and a specified waiting period requirement had to be satisfied. Media
Metrix and Jupiter filed notification and report forms with the Federal Trade
Commission and the Antitrust Division on July 17, 2000. [The companies were
notified on [____ __, 2000] that early termination of the waiting period was
granted.] [On ______ 2000, the waiting period under the Hart-Scott Rodino Act
expired.] Even after the waiting period expires or is terminated, the Federal
Trade Commission and the Antitrust Division retain the authority to challenge
the merger on antitrust grounds. In addition, each state in which Media Metrix
or Jupiter operates may also seek to review the merger. Any of these authorities
may seek to challenge the merger.
Under the merger agreement, we have both agreed to use our reasonable best
efforts to take all actions to obtain all necessary regulatory and governmental
approvals necessary to complete the merger and to address any concerns of
regulators and governmental officials. Our obligations to complete the merger
are dependent on the condition that there be no law enacted, and no judgment,
injunction or decree of any court or governmental entity in effect, that
prohibits the merger.
It is a condition to the merger that the shares of Media Metrix stock to be
issued in the merger be approved for listing on the Nasdaq National Market,
subject only to official notice of issuance. An application has been filed with
the Nasdaq National Market to list these shares. Following the merger, Jupiter
stock will no longer be registered under the Securities Act or traded on the
Nasdaq National Market.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF JUPITER MEDIA METRIX AFTER THE
MERGER
There are currently six members of the Media Metrix board of directors.
Upon completion of the merger, the number of directors on the board will be
increased to nine, of which five members will be designees of Media Metrix and
four members will be designees of Jupiter. The five Media Metrix designees are
Stig Kry, who will serve until Jupiter Media Metrix' first annual stockholders
meeting after the merger, James Mortensen and William W. Helman, who will serve
until Jupiter Media Metrix' second annual stockholders meeting after the merger,
and Tod Johnson and Randy Pausch, who will serve until Jupiter Media Metrix'
third annual stockholders meeting after the merger. The four Jupiter designees
are Robert Kavner and Gene DeRose, who will serve until Jupiter Media Metrix'
first annual stockholders meeting after the merger, Jeff Ballowe, who will serve
until Jupiter Media Metrix' second annual stockholders meeting after the merger,
and Kurt Abrahamson, who will serve until Jupiter Media Metrix' third annual
stockholders meeting after the merger.
Following the merger, the bylaws of Jupiter Media Metrix will provide that
any vacancy in a Media Metrix-appointed director's board seat must be filled by
a person nominated by the remaining Media Metrix-appointed directors, and any
vacancy in a Jupiter-appointed director's board seat must be filled by a person
nominated by the remaining Jupiter-appointed directors. This bylaw may be
amended to change this system of appointing replacement directors, but only by a
majority vote of the entire board of directors or by the stockholders of Jupiter
Media Metrix.
Following the merger:
- Tod Johnson, currently Chairman and Chief Executive Officer of Media
Metrix, will continue to serve as Chairman and Chief Executive Officer of
Jupiter Media Metrix;
- Gene DeRose, currently Chairman and Chief Executive Officer of Jupiter,
will become Vice Chairman and President of Jupiter Media Metrix;
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- Mary Ann Packo, currently President and Chief Operating Officer of Media
Metrix, will become Co-Chief Operating Officer of Jupiter Media Metrix and
will also continue as President of the Media Metrix Division of Jupiter
Media Metrix;
- Kurt Abrahamson, currently President and Chief Operating Officer of
Jupiter, will become Co-Chief Operating Officer of Jupiter Media Metrix and
will also continue as President of the Jupiter division of Jupiter Media
Metrix;
- Thomas Lynch, currently Chief Financial Officer of Media Metrix, will
continue to serve as Chief Financial Officer of Jupiter Media Metrix; and
- Jean Robinson, currently Chief Financial Officer of Jupiter, will become
Executive Vice President, Business Development, of Jupiter Media Metrix.
In addition, each of the other executive officers of Jupiter is expected to
continue to serve in the same capacity with the Jupiter Communications division
of Jupiter Media Metrix after the merger.
The following is biographical information on the individuals who currently
serve as directors and/or executive officers of Jupiter and who the merger
agreement provided will serve as directors and/or executive officers of Jupiter
Media Metrix following the merger:
GENE DEROSE, 37, has served as Chief Executive Officer of Jupiter since
November 1996 and served as President of Jupiter from its inception to November
1996. He has served as Chairman of the Board of Jupiter since July 1999.
Throughout 1994, prior to the formation of Jupiter, Mr. DeRose was the President
of the sole proprietorship which pre-dated the formation of Jupiter. Mr. DeRose
is a board member of MOUSE, a nonprofit organization that provides volunteer
technical manpower to New York City's public schools, and also serves on the
Advisory Board of the Markle Foundation's E-mail For All campaign, an initiative
that encourages the use of new communications technologies for socially
beneficial purposes. Mr. DeRose received his B.A. from the University of
Virginia. Mr. DeRose is the son-in-law of Robert Kavner, who will also serve as
a director of Jupiter Media Metrix following the merger.
KURT ABRAHAMSON, 39, has served as President and Chief Operating Officer of
Jupiter since November 1996 and has served as a director of Jupiter since July
1999. From 1994 to November 1996, Mr. Abrahamson served as Managing Director of
Jupiter. Between October 1989 and his joining Jupiter in 1994, Mr. Abrahamson
served as Principal Analyst for the Harvey M. Rose Corporation, a management
consulting firm. Mr. Abrahamson received a B.A. from Cornell University and an
M.A. from the John F. Kennedy School of Government at Harvard University.
JEAN ROBINSON, 44, has served as Chief Financial Officer of Jupiter since
March 1999. From January 1983 to January 1999, Ms. Robinson held various
corporate finance positions at J.P. Morgan & Co. Incorporated, including Vice
President, Equity Capital Markets, from June 1993 to January 1999. Ms. Robinson
received her B.A. from Smith College and an M.B.A. from Columbia University.
JEFFREY BALLOWE, 44, has served as a director of Jupiter since September
1999. From 1986 to 1997, Mr. Ballowe held various management positions at
Ziff-Davis, Inc., an international media company, culminating in a position as
President of the Interactive Media and Development Group. Mr. Ballowe is the
Chairman of the Board of Directors for deja.com and the not-for-profit
Electronic Literature Organization. He serves on the boards of GiveMeTalk.com,
NBC Internet, Onvia.com, SuperGroups.com and VerticalNet, and also serves on the
Advisory Board for the Internet Capital Group. Mr. Ballowe received his B.A.
from Lawrence University, an M.A. from the University of Wisconsin-Madison and
his M.B.A. from the University of Chicago.
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ROBERT KAVNER, 57, has served as a director of Jupiter since July 1999.
Since December 1998, Mr. Kavner has served as Vice Chairman and a General
Partner of idealab!, an incubator for starting and growing Internet businesses.
From September 1996 to December 1998, he was President and Chief Executive
Officer of On Command Corporation, a supplier of entertainment and information
services to the lodging industry. From June 1994 to September 1996, he was an
independent venture capitalist. From May 1984 to June 1994, he held a number of
senior level positions at AT&T Corporation, including Chief Executive Officer of
the Multimedia Products and Services Group and President of the Data Systems
Division. Prior to his work at AT&T, Mr. Kavner was a Partner at Coopers &
Lybrand, L.L.P. and was Co-Chairman of the firm's information industry practice.
Mr. Kavner serves on the Board of Directors of Fleet Financial Group, Inc.,
Earthlink Network, Inc., Ticketmaster Online Citysearch, Inc. and GoTo.Com, Inc.
He received his B.S. from Adelphi University and attended the Advanced
Management Program at Dartmouth University. Mr. Kavner is the father-in-law of
Gene DeRose.
Biographical information on the directors and executive officers of Media
Metrix can be found in the Media Metrix Definitive Proxy Statement on Form 14A,
filed with the SEC on May 1, 2000 and incorporated into this joint proxy
statement/prospectus by reference. Please see "Where You Can Find More
Information" on page 133.
FEDERAL SECURITIES LAWS CONSEQUENCES; STOCK TRANSFER RESTRICTIONS
This joint proxy statement/prospectus does not cover any resales of the
Media Metrix common stock which Jupiter stockholders will receive in the merger,
and no person is authorized to make any use of this joint proxy
statement/prospectus in connection with any such resale.
All shares of Media Metrix common stock received by Jupiter stockholders in
the merger will be freely transferable, except that shares received by
"affiliates" of Jupiter under the Securities Act of 1933 at the time of
Jupiter's special stockholders meeting may be resold only in transactions
permitted by Rule 145 under the Securities Act or as otherwise permitted under
the Securities Act. Persons who may be affiliates of Jupiter for those purposes
generally include individuals or entities that control, are controlled by, or
are under common control with, Jupiter, and would not include stockholders who
are not officers, directors or principal stockholders of Jupiter.
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THE MERGER AGREEMENT
GENERAL
The following summary of the merger agreement is qualified by reference to
the complete text of the merger agreement, which is incorporated by reference
and attached as Annex A to this joint proxy statement/prospectus.
We encourage you to read the merger agreement in its entirety.
STRUCTURE OF THE MERGER
Under the merger agreement, MMX Acquisition Corp., a wholly owned
subsidiary of Media Metrix, will merge with and into Jupiter. As a consequence
of the merger, Jupiter will become a wholly owned subsidiary of Media Metrix,
and Media Metrix will be renamed Jupiter Media Metrix, Inc.
CLOSING; EFFECTIVE TIME
The merger will become effective when we file a certificate of merger with
the Secretary of State of the State of Delaware. However, we may agree to a
later time and specify that time in the certificate of merger. We expect to file
the certificate of merger and complete the merger shortly after the two
stockholders meetings, assuming the stockholders of both companies approve the
transaction and the other conditions in the merger agreement are satisfied or
waived. Please see "Conditions to Completion of the Merger" on page 75 for a
discussion of these conditions.
WHAT STOCKHOLDERS WILL RECEIVE IN THE MERGER
If the merger is completed, each outstanding share of Jupiter common stock
will be automatically converted into the right to receive 0.946 of a share of
Media Metrix common stock. Immediately following the merger, the former Jupiter
stockholders will own approximately 45%, and the Media Metrix stockholders will
own approximately 55%, of Jupiter Media Metrix.
PROCEDURES FOR SURRENDER OF JUPITER CERTIFICATES; FRACTIONAL SHARES
As soon as reasonably practicable after the effective time of the merger,
Media Metrix will instruct the exchange agent for the merger to mail to each
person who holds shares of Jupiter common stock at the time of the merger, a
letter of transmittal and instructions with respect to the surrender of the
person's Jupiter stock certificates. YOU SHOULD NOT SEND YOUR STOCK CERTIFICATES
WITH THE ENCLOSED PROXY.
Commencing immediately after the effective time of the merger, upon
surrender by Jupiter stockholders of their stock certificates representing
Jupiter shares in accordance with the instructions, Jupiter stockholders will
receive stock certificates representing shares of Media Metrix common stock for
which those Jupiter shares have been exchanged, together with a cash payment
instead of fractional shares, if any, as described below.
After the merger, Jupiter will not record any further transfers of shares
of Jupiter common stock.
No fractional share of Media Metrix common stock will be issued for Jupiter
shares. Instead, the exchange agent will pay an amount in cash determined by
multiplying (x) the fractional share interest to which the Jupiter stockholder
would otherwise be entitled by (y) the closing price of a share of Media Metrix
common stock on the Nasdaq National Market on the last full trading day
immediately prior to the effective date of the merger.
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REPRESENTATIONS AND WARRANTIES
The merger agreement contains representations and warranties by each of us
to the other relating to, among other things:
- corporate organization, qualification, standing and power;
- capitalization;
- authorization, execution, delivery, performance and enforceability of,
required approvals of governmental authorities relating to, and
non-violation of agreements as a result of, the merger agreement;
- documents filed with the SEC since the date we became a public company,
including financial statements;
- the absence of undisclosed liabilities;
- compliance with applicable laws;
- employee benefit plan matters;
- absence of specified material changes or events since March 31, 2000;
- litigation;
- title to assets;
- intellectual property matters;
- material contracts;
- labor matters;
- tax matters;
- customers;
- opinion of financial advisor;
- takeover laws;
- required stockholder vote in connection with the merger; and
- intermediaries entitled to commissions in connection with the merger.
The representations and warranties will not survive the closing of the
merger.
CONDUCT OF BUSINESS
During the period from the date of the merger agreement to the effective
time of the merger, each of us must comply with agreements relating to the
conduct of our respective business, except as otherwise permitted by the merger
agreement or as consented to by the other party.
Each of us has agreed that we will:
- conduct our operations in the ordinary and usual course of business in
substantially the same manner as conducted prior to the time the merger
agreement was signed;
- use reasonable best efforts to preserve intact our business organization
and goodwill in all material respects;
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- use reasonable best efforts to keep available the services of our officers
and employees as a group, subject to changes in the ordinary course; and
- use reasonable best efforts to maintain our existing relationships with
suppliers, distributors, customers and others having business relationships
with us.
The merger agreement prohibits each of us, without the consent of the other
party, from taking any action outside of the parameters specified in the merger
agreement relating to the following matters:
- declaring or paying any dividends on, or making any distribution with
respect to, our outstanding stock;
- entering into or amending any employment, severance, change in control or
similar contract;
- granting any bonus or increasing the compensation or benefits provided to
any of our respective employees, other than to directors and certain
officers, except in the ordinary course of business;
- authorizing or entering into a contract with respect to, or taking any
action to complete any contract with respect to a merger or other business
combination, a liquidation or recapitalization or an acquisition or
disposition of a material amount of assets or securities;
- proposing or adopting any amendments to our charter or bylaws;
- issuing, selling or otherwise disposing of, or creating any encumbrance on,
any capital stock owned by us in any of our subsidiaries;
- issuing, selling or otherwise permitting to become outstanding any shares
of our capital stock or repurchasing any shares of our capital stock;
- granting or awarding any options, warrants, or other rights to acquire any
shares of our capital stock or of the capital stock of any of our
subsidiaries, or entering into any other share arrangement relating to
capital stock;
- amending the terms of any compensation or benefit plan, or adopting any new
employee benefit plan or other related contract;
- except under existing credit agreements, incurring, creating, assuming or
otherwise becoming liable for any indebtedness for borrowed money;
- transferring, leasing, licensing, mortgaging, pledging or creating any
other encumbrance on any material asset or material amount of assets;
- making any material tax election or settling or compromising any material
tax liability or taking any action which could reasonably be expected to
cause the merger to fail to qualify as a reorganization under the Internal
Revenue Code;
- incurring or committing to any capital expenditure, individually or in the
aggregate, in excess of a specified amount;
- entering into any contract containing any provision limiting our or any of
our subsidiaries' ability to (1) sell any products or services of or to any
other person, (2) engage in any line of business or (3) compete with or
obtain products or services from any person, or limiting the ability of any
person to provide products or services to us or any of our subsidiaries;
- implementing or adopting any change in our accounting principles, practices
or methods, other than as may be required by generally accepted accounting
principles or the Exchange Act; or
- settling any material litigation.
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NO SOLICITATION
The merger agreement provides that neither of us will, nor will either of
us authorize or permit any of our subsidiaries or our or any of our
subsidiaries' directors, officers, employees, advisors, agents or
representatives to, directly or indirectly:
- solicit, initiate, encourage or facilitate, or furnish or disclose
non-public information in furtherance of, any inquiries or the making of
any proposal with respect to any competing transaction, as defined in the
merger agreement;
- negotiate or otherwise engage in discussions with any person with respect
to any competing transaction; or
- enter into any contract or understanding requiring us to abandon, terminate
or fail to complete the merger or any of the other transactions
contemplated by the merger agreement.
In addition, each of us agreed in the merger agreement that we would
immediately cease all existing activities, discussions and negotiations with any
persons conducted prior to the execution of the merger agreement with respect to
any proposal for a competing transaction and request the return or destruction
of all non-public information furnished in connection with those activities,
discussions or negotiations.
However, each of us has agreed that, if either of our companies, before our
stockholders meeting takes place, receives an unsolicited written proposal with
respect to a competing transaction, and the company's board of directors
determines, in good faith by a majority vote, after advice from its outside
legal counsel, that the failure to furnish information and negotiate or
otherwise engage in discussions would constitute a breach of the fiduciary
duties of the board, and after consultation with the company's independent
financial advisors that such proposal could reasonably be expected to lead to a
superior transaction, as defined in the merger agreement, then the company may:
- furnish information to the person making the proposal under a customary
confidentiality agreement; and
- participate in discussions or negotiations regarding the proposal.
In addition, each of us has agreed to promptly advise the other in writing
of the receipt of any inquiries or proposals relating to a competing
transaction, the specific terms of the competing transaction and the identity of
the person making the inquiry or proposal. Each company will also keep the other
informed of the status of these inquiries or proposals, of the furnishing of
information, and of any related negotiations or discussions.
If the board of directors of Jupiter or the board of directors of Media
Metrix determines, based on the written opinion from that company's independent
financial advisors that the competing transaction is a superior transaction, and
based on the advice of that company's outside legal counsel, that a proposed
competing transaction for its company constitutes a superior transaction, and is
in the best interests of that company and its stockholders and failure to enter
into the competing transaction would constitute a breach of the fiduciary duties
of the board of directors of that company, then, first, that company must
provide the other company three business days' written notice that it intends to
terminate the merger agreement and, second, on the date of termination, that
company must deliver to the other company:
- a written notice of termination of the merger agreement;
- a wire transfer in the amount of the termination fee of $16 million;
- a written acknowledgment from that company that the termination of the
merger agreement and the entry into the superior transaction are events
which entitle the other company to be paid the termination fee; and
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- a written acknowledgment from each other party to the superior transaction
that it has read the terminating company's acknowledgment referred to above
and will not contest the matters acknowledged by that company, including
the payment of the termination fee.
A "competing transaction" is defined in the merger agreement as any
inquiry, proposal or offer from any person relating to any:
- recapitalization, merger, consolidation, or other business combination
involving that company;
- acquisition of 15% or more of the outstanding capital stock of that company
or any of its subsidiaries;
- acquisition of 15% or more, on a book value or fair market value basis, of
the assets of that company and its subsidiaries taken as a whole; or
- a combination of the foregoing transactions.
A "superior transaction" is defined in the merger agreement as a competing
transaction which the board of directors of Media Metrix or Jupiter, as the case
may be, reasonably determines is more favorable to that company and its
stockholders than the merger and which is not subject to any financing
condition. A competing transaction cannot constitute a superior transaction
unless, in the written opinion of that company's independent financial advisors,
the value of the consideration to be paid in the competing transaction is more
favorable to the stockholders of that company from a financial point of view
than the consideration being paid by Media Metrix in the merger.
Neither Media Metrix nor Jupiter may take any action to make any takeover
laws inapplicable to any competing transaction in respect of that company prior
to the termination of the merger agreement.
EMPLOYEE PLANS AND BENEFIT ARRANGEMENTS
Media Metrix has agreed that the surviving corporation will honor all
pre-merger obligations under all existing Jupiter compensation and benefit
plans.
Media Metrix has agreed that, for purposes of eligibility and vesting, but
not benefit accrual, all active Jupiter employees will receive credit for all
pre-merger service with Jupiter or any subsidiary under the employee benefit
plans of Media Metrix in which they start to participate after the merger, but
only to the extent that Jupiter credited this service for similar purposes prior
to the merger and Jupiter Media Metrix recognizes this service for employees
other than the Jupiter employees. Any employee benefit plan which provides
medical, dental or life insurance benefits after the merger to any active
Jupiter employee will, with respect to those individuals, waive any waiting
periods and any pre-existing conditions and actively-at-work exclusions to the
extent waived under present policies of Jupiter and its subsidiaries, and will
provide that any expenses incurred before the merger by those individuals will
be taken into account under those plans for purposes of satisfying applicable
deductible or coinsurance provisions to the extent taken into account under
present policy of Jupiter.
JUPITER STOCK OPTIONS
At the time of the merger, all options to purchase shares of Jupiter common
stock that were granted under Jupiter's 1997 Employee Stock Option Plan, its
1999 Stock Incentive Plan or as compensation for services to Jupiter or any of
its subsidiaries will be converted automatically into options to acquire Media
Metrix common stock. The Jupiter options will each become exercisable for the
number of shares of Media Metrix common stock determined by multiplying the
number of shares of Jupiter common stock that were subject to the option
immediately prior to the merger by the 0.946 exchange ratio. The exercise price
per share of Media Metrix common stock will be the exercise price of the Jupiter
option in effect
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immediately prior to the merger divided by the 0.946 exchange ratio, and the
options will otherwise have the same terms and conditions, including the same
schedule as to exercisability, as were in effect for the Jupiter options
immediately prior to the merger. We intend that after the merger each Jupiter
option assumed by Media Metrix will qualify as an incentive stock option, as
defined in Section 422 of the Internal Revenue Code, to the extent that it
qualified as an incentive stock option prior to the merger.
Media Metrix has agreed that, within 10 days after completion of the
merger, it will file a registration statement on Form S-8 for the shares of
Media Metrix common stock issuable upon exercise of the Media Metrix options
into which the outstanding Jupiter stock options will be converted upon
completion of the merger.
GOVERNANCE
Media Metrix agreed that, following the merger, the board of directors of
Jupiter Media Metrix will be comprised of the following nine persons:
- one Media Metrix designee and two Jupiter designees, who will be assigned
to the class of directors whose term of office expires at Jupiter Media
Metrix' first annual meeting of stockholders after the merger;
- two Media Metrix designees and one Jupiter designee, who will be assigned
to the class of directors whose term of office expires at Jupiter Media
Metrix' second annual meeting of stockholders after the merger; and
- two Media Metrix designees and one Jupiter designee, who will be assigned
to the class of directors whose term of office expires at Jupiter Media
Metrix' third annual meeting of stockholders after the merger.
Media Metrix has also agreed that the board of directors of Media Metrix
will appoint, effective immediately following the merger:
- Gene DeRose as Vice Chairman and President of Jupiter Media Metrix;
- Kurt Abrahamson and Mary Ann Packo as Co-Chief Operating Officers of
Jupiter Media Metrix, (and each will serve as President of his or her
operating division); and
- Jean Robinson as Executive Vice President, Business Development of Jupiter
Media Metrix.
Following the merger, Tod Johnson will serve as Chairman and Chief
Executive Officer of Jupiter Media Metrix, and Thomas Lynch will serve as Chief
Financial Officer of Jupiter Media Metrix. All of the foregoing persons are to
serve in accordance with the provisions of the charter and bylaws of Jupiter
Media Metrix and the provisions of the Delaware General Corporation Law.
INDEMNIFICATION AND INSURANCE
Media Metrix has agreed that all rights to exculpation and indemnification
for acts or omissions occurring at or prior to the merger which now exist in
favor of the current or former directors or officers of Jupiter or any of its
subsidiaries under Jupiter's certificate of incorporation or bylaws or any
contract disclosed to Media Metrix will continue in effect following the merger
in accordance with their terms.
Media Metrix has also agreed, for six years following the merger, to
indemnify the current and former directors and officers of Jupiter or any of its
subsidiaries for acts or omissions occurring at or prior to the merger to the
fullest extent permitted by applicable law, including with respect to taking all
actions necessary to advance expenses.
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Media Metrix has agreed to use its reasonable best efforts to maintain or
cause Jupiter to maintain in effect for six years following the merger,
Jupiter's current directors' and officers' liability insurance covering those
persons currently covered by that insurance policy, except that, in any year,
Media Metrix need not pay more than 150% of the annual premium currently paid by
Jupiter for its existing coverage.
EXPENSES
Whether or not the Merger is completed, each of Jupiter and Media Metrix
will pay its own all costs and expenses incurred in connection with the merger
agreement, except that the expenses incurred in connection with the filing and
printing of the registration statement and the mailing of the joint proxy
statement/prospectus and the fee paid in connection with the filings made
pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 are shared
equally by Jupiter and Media Metrix.
CONDITIONS TO THE COMPLETION OF THE MERGER
We may complete the merger only if the following conditions are met:
- the Jupiter stockholders and the Media Metrix stockholders have approved
each of the proposals required to complete the merger;
- all material regulatory approvals required to be obtained in connection
with the merger are obtained;
- there is no law, court order or injunction in effect which prohibits the
completion of the merger;
- the registration statement on Form S-4 of which this joint proxy
statement/prospectus is a part is effective under the Securities Act and we
have satisfied all state securities or "blue sky" laws;
- the shares of Media Metrix common stock to be issued in the merger are
approved for listing on Nasdaq; and
- Media Metrix and Jupiter have received opinions from their respective
outside legal counsel that the merger will qualify for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code.
In addition, the obligations of each party to effect the merger is subject
to the satisfaction or waiver of the following additional conditions:
- the representations and warranties of the other party contained in the
merger agreement, being read as though none of them contains any material
adverse effect or materiality qualifier, are true and correct on the date
of the merger as if made on the date of the merger except (1) for changes
specifically permitted by the merger agreement and (2) where the failure of
the representations and warranties to be true and correct in all respects
would not in the aggregate have a material adverse effect on the other
party;
- all obligations and covenants required to be performed and complied with by
the other party on or before the date of the merger have been in all
material respects performed and complied with;
- the noncompetition agreements of the other party with certain of its
employees continue to be in full force and effect on the date of the merger
without any modification, and that noncompetition agreements with specified
employees have not been breached by those employees; and
- no fact, event or circumstance has occurred which would, individually, in
the aggregate, or together with all other existing facts, events and
circumstances, have a material adverse effect on the other party.
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It is also a condition of Jupiter's obligations to effect the merger that
the bylaws of Media Metrix have been amended to provide, first, that
vacancies on the board of directors of Jupiter Media Metrix created by the
cessation of service of a Jupiter designee or Media Metrix designee, as the
case may be, will be filled by a person selected by a majority of that
company's designees then serving on such board of directors, and, second,
that this bylaw may not be amended except by the vote of a majority of the
entire board of directors or the stockholders of Jupiter Media Metrix.
TERMINATION
The merger agreement may be terminated:
- by mutual written consent of Media Metrix and Jupiter;
- by either Media Metrix or Jupiter:
- if the merger is not completed by December 31, 2000, except that
a party may not terminate the agreement if its failure to fulfill
its obligations is the cause of the merger not being completed by
December 31, 2000;
- if Jupiter stockholders, at Jupiter's special stockholders
meeting, fail to adopt the merger agreement;
- if Media Metrix stockholders, at the Media Metrix special
stockholders meeting, fail to approve each of the proposals
required to complete the merger;
- if a court issues an order or a law has been enacted that makes
the completion of the merger illegal, or if any final order or
decree has been issued enjoining Media Metrix or Jupiter from
completing the merger; or
- if there has been a material breach by the other party of any of
its representations, warranties, covenants or agreements
contained in the merger agreement, which breach would result in
the failure to satisfy one or more of the conditions to the
merger, and that breach is incapable of being cured or, if
capable of being cured, has not been cured within 30 days after
written notice was received by the party alleged to be in breach.
- by Media Metrix:
- if the board of directors of Jupiter (1) does not recommend that
Jupiter stockholders vote in favor of the merger agreement and
the merger or withdraws its recommendation, (2) modifies its
recommendation in a manner adverse to Media Metrix, or (3)
approves, recommends or fails to take a position that is adverse
to any proposed competing transaction involving Jupiter;
- if the board of directors of Jupiter refuses to affirm its
recommendation within five days after receipt of any reasonable
written request for such affirmation from Media Metrix;
- if Jupiter fails to hold the special stockholders meeting when
scheduled; or
- in order to enter into a transaction that the Media Metrix board
has determined, after complying with the procedures contained in
the merger agreement, among other things, to be more favorable to
Media Metrix' stockholders than the merger.
- by Jupiter:
- if the board of directors of Media Metrix (1) does not recommend
that Media Metrix' stockholders vote in favor of the proposals
required to complete the merger or withdraws its recommendation,
(2) modifies its recommendation in a manner adverse to Jupiter,
or
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(3) approves, recommends or fails to take a position that is
adverse to any proposed competing transaction involving Media
Metrix;
- if the board of directors of Media Metrix refuses to affirm its
recommendation within five days after receipt of any reasonable
written request for such affirmation from Jupiter;
- if Media Metrix fails to hold the special stockholders meeting
when scheduled; or
- in order to enter into a transaction that the Jupiter board has
determined, after complying with the procedures contained in the
merger agreement, among other things, to be more favorable to
Jupiter's stockholders than the merger.
Jupiter has agreed that it will pay Media Metrix a $16 million termination
fee if:
- Media Metrix terminates the merger agreement because the board of
directors of Jupiter (1) does not recommend that Jupiter stockholders
vote in favor of the merger agreement and the merger or withdraws its
recommendation, (2) modifies its recommendation in a manner adverse to
Media Metrix, (3) approves, recommends or fails to take a position
that is adverse to any proposed competing transaction involving
Jupiter, or (4) refuses to affirm its recommendation within five days
after receipt of any reasonable request to do so from Media Metrix;
- Media Metrix terminates the merger agreement because Jupiter fails to
hold its special stockholders meeting when scheduled;
- Media Metrix or Jupiter terminates the merger agreement because either
(1) the merger is not completed before December 31, 2000 or (2) the
Jupiter stockholders fail to adopt the merger agreement at the Jupiter
special stockholders meeting, and, in either case,
- a competing transaction is publicly proposed or announced on or
after the date of the merger agreement and before the Jupiter
special stockholders meeting, and
- a Jupiter business combination is entered into, agreed to or
completed by Jupiter or any of its subsidiaries within twelve
months following termination of the merger agreement;
- Jupiter terminates the merger agreement in order to enter into a
transaction which its board has determined to be more favorable to its
stockholders than the merger; or
- Media Metrix or Jupiter terminates the merger agreement because (1)
either:
- the merger is not completed before December 31, 2000,
- the Jupiter stockholders fail to approve the merger at Jupiter's
special stockholders meeting, or
- there is a material breach by Jupiter of any of its
representations, warranties, covenants or agreements which breach
would result in a failure by Jupiter to comply with the
conditions of closing, but only if the breach arises out of the
bad faith or willful misconduct of Jupiter, and
(2) a business combination, as defined in the merger agreement, with
Jupiter is entered into, agreed to or completed within three months
following termination of the merger agreement.
Media Metrix has agreed that it will pay Jupiter a $16 million termination
fee if:
- Jupiter terminates the merger agreement because the board of directors
of Media Metrix (1) does not recommend that Media Metrix stockholders
vote in favor of the proposals required to complete the merger or
withdraws its recommendation, (2) modifies its recommendation in a
manner adverse to Jupiter, (3) approves, recommends or fails to take a
position that is adverse to
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any proposed competing transaction involving Media Metrix, or (4)
refuses to affirm its recommendation within five days after receipt of
any reasonable request to do so from Jupiter;
- Jupiter terminates the merger agreement because Media Metrix fails to
hold its special stockholders meeting when scheduled;
- Media Metrix or Jupiter terminates the merger agreement because either
(1) the merger is not completed before December 31, 2000 or (2) the
Media Metrix stockholders fail to authorize the proposals required to
complete the merger, and, in either case,
- a competing transaction is publicly proposed or announced on or
after the date of the merger agreement and before the Media
Metrix special stockholders meeting, and
- a Media Metrix business combination is entered into, agreed to or
completed by Media Metrix or any of its subsidiaries within
twelve months following termination of the merger agreement;
- Media Metrix terminates the merger agreement in order to enter into a
transaction which its board has determined is more favorable to its
stockholders than the merger; or
- Jupiter or Media Metrix terminates the merger agreement because (1)
either:
- the merger is not completed before December 31, 2000,
- the Media Metrix stockholders fail to authorize the proposals
required to complete the merger at Media Metrix' special
stockholders meeting, or
- there is a material breach by Media Metrix of any of its
representations, warranties, covenants or agreements which breach
would result in a failure by Media Metrix to comply with the
conditions of closing, but only if such breach arises out of the
bad faith or willful misconduct of Media Metrix, and
(2) a business combination, as defined in the merger agreement, with
Media Metrix is entered into, agreed to or completed within three
months following termination of the merger agreement.
If either Media Metrix or Jupiter becomes obligated to but does not
promptly pay the termination fee, then the party required to pay the fee
shall pay to the party owed such fee that party's expenses in connection
with any litigation brought to obtain payment of the fee.
A "business combination" is defined in the merger agreement as:
- any merger, consolidation or other business combination as a result of
which the stockholders of the company would hold less than 60% of the
voting securities of the company outstanding following the
transaction;
- the acquisition of 40% or more of the outstanding capital stock of the
company; or
- the acquisition of 40% or more, on a book value basis or fair market
value basis, of the assets of the company and its subsidiaries taken
as a whole.
AMENDMENTS
We may amend the merger agreement at any time before or after stockholder
approval of the merger agreement. After stockholder approval of the merger
agreement, we may not make any amendment that, by law or in accordance with the
rules of the NASD, requires approval by Jupiter stockholders or approval by
Media Metrix stockholders without the approval of those stockholders.
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THE VOTING AGREEMENTS
GENERAL
The following summary of the voting agreements is qualified by reference to
the complete text of the voting agreements, which are incorporated by reference
and attached as Annex B to this joint proxy statement/prospectus. We encourage
you to read the voting agreements in their entirety.
MEDIA METRIX VOTING AGREEMENT WITH JUPITER STOCKHOLDERS
As an inducement to Media Metrix to enter into the merger agreement, Ernest
Abrahamson, Kurt Abrahamson, and Gene DeRose entered into a voting agreement
with Media Metrix under which they have agreed to vote all of the shares of
Jupiter common stock owned by them (1) in favor of the merger and the merger
agreement, (2) against any competing transaction, and (3) against any proposed
action or transaction that would result in a breach of any representation,
warranty, covenant or agreement of Jupiter under the merger agreement or result
in a failure by Jupiter to comply with the closing conditions or that would
otherwise prevent, interfere with, frustrate or delay completion of the merger.
These Jupiter stockholders have also agreed not to sell, transfer or
encumber any of the Jupiter shares owned by them.
As part of the voting agreement, each of these Jupiter stockholders granted
an irrevocable proxy to Media Metrix to vote the shares of Jupiter common stock
owned by him in accordance with the voting agreement. These Jupiter stockholders
own a total of 4,125,071 shares of Jupiter common stock, representing
approximately 26% of the Jupiter common stock outstanding as of June 22, 2000,
as represented by Jupiter in the merger agreement.
JUPITER VOTING AGREEMENT WITH MEDIA METRIX STOCKHOLDERS
As an inducement to Jupiter to enter into the merger agreement, The 1995
Stacey Johnson Trust, The 1995 Scott Johnson Trust, The NPD Group, Inc. and
Greylock IX L.P. have entered into a voting agreement with Jupiter under which
they have agreed to vote all of the shares of Media Metrix common stock owned by
them (1) in favor of the proposed amendment to Media Metrix' charter and the
proposed issuance of Media Metrix common stock in the merger, (2) against any
competing transaction, and (3) against any proposed action or transaction that
would result in a breach of any representation, warranty, covenant or agreement
of Media Metrix under the merger agreement or result in a failure by Media
Metrix to comply with the closing conditions or that would otherwise prevent,
interfere with, frustrate or delay completion of the merger.
These Media Metrix stockholders have also agreed not to sell, transfer or
encumber any of the Media Metrix shares owned by them, except that Greylock IX,
L.P. is not subject to these restrictions and The NPD Group, Inc. may transfer
shares in order to comply with options which it had previously granted on those
shares.
As part of the voting agreement, each of these Media Metrix stockholders
granted an irrevocable proxy to Jupiter to vote the shares of Media Metrix
common stock owned by it. These Media Metrix stockholders own a total of
7,127,972 shares of Media Metrix common stock, representing approximately 36% of
the Media Metrix common stock outstanding as of June 22, 2000, as represented by
Media Metrix in the merger agreement.
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AMENDMENT OF THE MEDIA METRIX 2000 EQUITY INCENTIVE PLAN
GENERAL
In May 2000, the board of directors of Media Metrix adopted the Media
Metrix 2000 Equity Incentive Plan. Media Metrix' stockholders approved the
adoption of the 2000 Equity Incentive Plan at the 2000 Annual Stockholder's
Meeting.
THE PROPOSED AMENDMENT TO THE 2000 EQUITY INCENTIVE PLAN
On July [__], 2000, the Media Metrix board of directors adopted, subject to
stockholder approval, an amendment to the 2000 Equity Incentive Plan to:
- increase the maximum number of shares of Media Metrix common stock
available for issuance under the 2000 Equity Incentive Plan in
calendar year 2000 from 2,000,000 to 4,000,000,
- increase the maximum amount of the annual increase in shares available
for issuance under the plan from the lesser of 1,000,000 shares or 4%
of the outstanding shares to the lesser of two million shares or 4% of
the outstanding shares, and
- increase the maximum number of shares available for issuance during
the term of the plan from 6,000,000 to 12,000,000.
At the Media Metrix special stockholders meeting, stockholders of Media Metrix
are being asked to consider and vote upon the proposed amendment.
The success of Media Metrix depends, in large part, on its ability to
attract, retain and motivate key employees with experience and ability. Media
Metrix' board of directors believes that the opportunity to receive stock-based
incentives under the 2000 Equity Incentive Plan provides an important incentive
to key employees of Media Metrix and that the 2000 Equity Incentive Plan will
continue to assist Media Metrix in attracting and retaining quality personnel.
Furthermore, if the merger is completed, the pool of key employees will be
significantly expanded. Accordingly, Media Metrix' board of directors believes
that it is in the best interests of Media Metrix to increase the maximum number
of shares available for issuance under the 2000 Equity Incentive Plan in
calendar year 2000 and during the term of the plan in order (1) to continue to
attract and retain key employees, including key employees of Jupiter who
continue as employees of the combined enterprise after the merger is completed
and (2) to provide additional incentive and reward opportunities to current
employees, including these Jupiter employees, to encourage them to enhance the
profitable growth of Media Metrix. ACCORDINGLY, MEDIA METRIX' BOARD OF DIRECTORS
RECOMMENDS THAT MEDIA METRIX STOCKHOLDERS VOTE "FOR" APPROVAL OF THE PROPOSED
AMENDMENT TO THE 2000 EQUITY INCENTIVE PLAN.
If the proposed amendment to the 2000 Equity Incentive Plan is approved,
the amendment will become effective as of July [__], 2000. If the proposed
amendment to the 2000 Equity Incentive Plan is not approved by Media Metrix
stockholders, the 2000 Equity Incentive Plan will remain in effect with the
terms existing prior to July [__], 2000. Although approval of the proposed
amendment to the 2000 Equity Incentive Plan will not necessarily result
immediately in additional grants under the 2000 Equity Incentive Plan, it is
expected that Media Metrix' Compensation Committee will make periodic grants
under the 2000 Equity Incentive Plan in furtherance of the goals described
above.
The principal provisions of the 2000 Equity Incentive Plan are summarized
below. This summary, however, does not purport to be complete and is qualified
in its entirety by the terms of the 2000 Equity Incentive Plan.
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GENERAL DESCRIPTION OF THE 2000 EQUITY INCENTIVE PLAN
The 2000 Equity Incentive Plan authorizes the grant of stock options, stock
appreciation rights, restricted stock, performance-based awards and other
stock-based awards to any member of Media Metrix' board of directors, any of
Media Metrix' officers, Media Metrix' affiliates or other employees or any
consultant or other independent contractor who performs or will perform services
for Media Metrix or its affiliates. In addition, each of Media Metrix'
non-employee directors receives automatic grants of stock options under the 2000
Equity Incentive Plan.
Available Shares. Prior to the amendment of the 2000 Equity Incentive Plan
in July 2000, subject to adjustment to reflect stock dividends and other capital
changes, the maximum number of shares of Media Metrix common stock that could be
issued, or used for reference purposes, in calendar year 2000 under the 2000
Equity Incentive Plan was 2,000,000 shares, provided that this maximum number of
shares would be automatically increased on the first trading day of each
calendar year, beginning with the 2001 calendar year, by an amount equal to the
lesser of (1) 4% of the total number of shares of Media Metrix common stock
outstanding on the last trading day of the immediately preceding calendar year
or (2) 1,000,000 shares. In no event, however, could more than 6,000,000 shares
of Media Metrix common stock be issued, or used for reference purposes, under
the 2000 Equity Incentive Plan during the 2000 Equity Incentive Plan's term.
Following the amendment of the 2000 Equity Incentive Plan in July, 2000 and
assuming approval of the amendment by Media Metrix stockholders, subject to
adjustment to reflect stock dividends and other capital changes, the maximum
number of shares of Media Metrix common stock that may be issued, or used for
reference purposes, in calendar year 2000 under the 2000 Equity Incentive Plan
will be 4,000,000 shares, provided that such maximum number of shares will be
automatically increased on the first trading day of each calendar year,
beginning with the 2001 calendar year, by an amount equal to the lesser of (1)
4% of the total number of shares of Media Metrix common stock outstanding on the
last trading day of the immediately preceding calendar year or (2) 2,000,000
shares. In no event, however, may more than 6,000,000 shares of Media Metrix
common stock be issued, or used for reference purposes, under the 2000 Equity
Incentive Plan during the 2000 Equity Incentive Plan's term.
Shares subject to awards under the 2000 Equity Incentive Plan that are
canceled, expired, terminated, forfeited or withheld to pay the exercise price
of options or to satisfy tax withholding obligations will again be available for
issuance or reference under the 2000 Equity Incentive Plan. Any shares of common
stock that are issued, and any awards that are granted, through the assumption
of, or in substitution for, outstanding awards previously granted by an acquired
entity are not counted against the shares of common stock available for issuance
or reference purposes under the 2000 Equity Incentive Plan.
The shares issuable under the 2000 Equity Incentive Plan may be either
authorized and unissued or held by Media Metrix in its treasury. The 2000 Equity
Incentive Plan became effective as of March 28, 2000 and will, unless terminated
earlier by Media Metrix' board of directors, terminate on March 28, 2010.
Subject to adjustment to reflect stock dividends and other capital changes,
the maximum number of shares of Media Metrix common stock with respect to which
stock options, stock appreciation rights or other awards may be granted under
the 2000 Equity Incentive Plan to any employee for any calendar year will, in
each case, be 1,000,000 shares. Not more than $1,000,000 may be paid to any
employee under the 2000 Equity Incentive Plan with respect to any cash
performance-based award, or multiple cash performance-based awards ending with
or within the same fiscal year.
Administration. The 2000 Equity Incentive Plan provides that, unless Media
Metrix' board of directors determines otherwise, it will, except with respect to
discretionary awards to non-employee
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directors, be administered by the Compensation Committee, and, because the board
of directors has not so provided, the Compensation Committee currently
administers the plan. Subject to the provisions of the 2000 Equity Incentive
Plan, the Compensation Committee, except with respect to discretionary awards to
non-employee directors, has the authority to grant awards under the 2000 Equity
Incentive Plan, to interpret the provisions of the 2000 Equity Incentive Plan,
to fix and interpret the provisions of agreements governing awards made under
the 2000 Equity Incentive Plan, to supervise the administration of the 2000
Equity Incentive Plan, and to take such other actions as may be necessary or
desirable in order to carry out the provisions of the 2000 Equity Incentive
Plan. The 2000 Equity Incentive Plan is administered by Media Metrix' board of
directors with respect to discretionary awards to non-employee directors.
Discretionary Stock Option Awards. Under the 2000 Equity Incentive Plan,
the Compensation Committee may grant stock options that are intended to qualify
as "incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code and stock options which do not qualify as incentive stock options,
i.e., non-statutory options. Incentive stock options may only be granted to
employees of Media Metrix or its affiliates that qualify as "subsidiaries"
within the meaning of the Internal Revenue Service rules.
The exercise price for shares covered by an incentive stock option may not
be less than 100% of the fair market value of the common stock on the date of
grant, or, in the case of a grant to an employee who owns stock possessing more
than 10% of the combined voting power of all classes of Media Metrix' stock or
any subsidiary, 110% of the fair market value. The exercise price for shares
covered by non-statutory options may not be less than 85% of the fair market
value of Media Metrix common stock on the date of grant, provided that the
exercise price of a non-statutory option that is intended to qualify as
performance-based compensation within the meaning of Section 162(m) of the
Internal Revenue Code may not be less than the fair market value of the common
stock on the date of the grant.
All options will, unless sooner terminated, expire ten years, or, in the
case of an incentive stock option granted to a 10% stockholder, five years, from
the date of grant. The Compensation Committee has the discretion to determine
the vesting and other restrictions on the exercise of an option and/or upon the
disposition of stock acquired upon the exercise of an option.
The 2000 Equity Incentive Plan generally provides that, unless the
Compensation Committee determines otherwise, following a participant's
termination of employment or service: (1) for any reason other than death or
disability, the participant will have ninety days to exercise all options that
are exercisable on the termination date, (2) as the result of death, the
participant's beneficiary will have one year to exercise all options that are
exercisable on the termination date, and (3) due to disability, the participant
will have six months to exercise all options that are exercisable on the
termination date, provided that, in all instances, no option may be exercised
beyond the expiration of its stated term or subsequent to the termination of a
participant's employment or service by Media Metrix or its affiliates for cause.
Payment for shares acquired upon the exercise of an option may be made, as
determined by the Compensation Committee, in cash and/or such other form of
payment as may be permitted by the Compensation Committee from time to time,
including, without limitation, previously-owned shares of Media Metrix common
stock, installment payments under the optionee's promissory note, or in
accordance with a "cashless" exercise procedure.
Stock Appreciation Right Awards. The Compensation Committee may award stock
appreciation rights which entitle the holder, upon exercise, to receive an
amount, in cash or shares of common stock or a combination thereof, as
determined by the Compensation Committee, determined with reference to the
appreciation, if any, in the fair market value of Media Metrix common stock
during the period beginning
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<PAGE> 92
on the date the stock appreciation right is granted and ending on the date the
stock appreciation right is exercised. Stock appreciation rights may be awarded
in conjunction with or independent of any stock option award. Stock appreciation
rights granted in conjunction with a stock option award are exercisable only at
the same time and to the same extent as the related option is exercisable and
may only be exercised when the fair market value of the common stock to which it
relates exceeds the option exercise price.
The 2000 Equity Incentive Plan generally provides that, unless otherwise
determined by the Compensation Committee, following a participant's termination
of employment or service: (1) for any reason other than death or disability, the
participant will have ninety days to exercise all then exercisable stock
appreciation rights that are exercisable at the termination date, (2) as the
result of death, the participant's beneficiary will have one year to exercise
all stock appreciation rights that are exercisable at the termination date, and
(3) due to disability, the participant will have six months to exercise all
stock appreciation rights that are exercisable at the termination date, provided
that, in all instances, no stock appreciation right may be exercised beyond the
expiration of its stated term or subsequent to the participant's termination for
cause.
Restricted Stock Awards. The Compensation Committee may award shares of
restricted stock to all eligible personnel upon such terms and subject to
forfeiture as it deems appropriate. Any award of restricted stock must be
evidenced by a written restricted stock agreement or similar instrument. The
Compensation Committee determines the purchase price payable for shares of
restricted stock awarded under the 2000 Equity Incentive Plan in accordance with
applicable law and establishes conditions on the grant or vesting of such shares
as it deems appropriate including, without limitation, conditions based on
continued service or the attainment of performance goals established by the
Compensation Committee or, if the restricted stock is intended to qualify as
performance-based compensation under Section 162(m) of the Internal Revenue
Code, performance goals based on the performance criteria described below.
The holder of restricted stock is entitled to dividends on such shares, may
vote such shares and, subject to the satisfaction of applicable vesting
conditions, may tender such shares. The Compensation Committee may, however,
defer the payment of dividends until, and condition such payment upon, the
satisfaction of the applicable vesting conditions.
Upon a participant's termination of employment or service for any reason,
including death or disability, or no reason, the participant will, unless
otherwise determined by the Compensation Committee, automatically forfeit all
restricted stock which has not yet become fully vested.
Performance-Based Awards. The 2000 Equity Incentive Plan allows the
Compensation Committee to condition the exercise, vesting or settlement of an
award on the achievement of specified performance goals, including those
intended to generate "qualified performance-based compensation" within the
meaning of Section 162(m) of the Internal Revenue Code. Any performance goal
established in connection with an award under the 2000 Equity Incentive Plan
must be objective, prescribed in writing by the Compensation Committee before
the beginning of the applicable performance period and expressed in a manner
that conforms to one or more of the following business criteria:
- the attainment of certain target levels of, or a specified percentage
increase in, revenues, income before income taxes and extraordinary
items, net income, earnings before income tax, earnings before
interest, taxes, depreciation and amortization or a combination of any
or all of the foregoing;
- the attainment of certain target levels of, or a percentage increase
in, after-tax or pre-tax profits;
- the attainment of certain target levels of, or a specified increase
in, operational cash flow;
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<PAGE> 93
- the achievement of a certain level of, reduction of, or other
specified objectives with regard to limiting the level of increase in,
all or a portion of, Media Metrix' bank debt or other long-term or
short-term public or private debt or Media Metrix' other similar
financial obligations, which may be calculated net of such cash
balances and/or other offsets and adjustments as may be established by
the Compensation Committee;
- the attainment of a specified percentage increase in earnings per
share or earnings per share from continuing operations;
- the attainment of certain target levels of, or a specified increase
in, return on capital employed or return on invested capital;
- the attainment of certain target levels of, or a percentage increase
in, after-tax return on stockholders' equity;
- the attainment of certain target levels of, or a specified increase
in, economic value added targets based on a cash flow return on
investment formula;
- the attainment of certain target levels in the fair market value of
the shares of common stock; and/or
- growth in the value of an investment in the common stock assuming the
reinvestment of dividends.
At the expiration of the applicable performance period, the Compensation
Committee will determine the extent to which the performance goals are attained
and the percentage of each performance-based award that has been earned. The
Compensation Committee may reduce the amount that would otherwise be payable
pursuant to a performance-based award, but may not increase such amount.
Following each determination, the Compensation Committee, in its sole
discretion, may pay earned performance-based awards in the form of cash or in
shares of common stock, or in a combination thereof. Unless otherwise determined
by the Compensation Committee, payment of earned performance-based awards is
made in a single lump sum following the close of the applicable performance
period. Any such shares may be granted subject to any restrictions deemed
appropriate by the Compensation Committee. If the Compensation Committee
determines to pay a performance based award in shares, it may also determine to
pay dividends on those shares prior to distribution of the shares to a
participant.
Unless otherwise determined by the Compensation Committee, all outstanding
performance-based awards expire upon the termination of the participant's
employment or service for any reason or no reason.
Other Stock-Based Awards. Other awards of common stock and awards that are
valued in whole or in part by reference to, or are payable in or otherwise based
on, common stock may be granted either alone or in addition to or in tandem with
options, stock appreciation rights, restricted stock and performance-based
awards. The Compensation Committee may also provide for the grant of common
stock under such awards upon the completion of a specified performance period.
Unless otherwise determined by the Compensation Committee at the time of grant,
the recipient of a stock-based award is entitled to receive, currently or on a
deferred basis, dividends or dividend equivalents with respect to the number of
shares of common stock covered by the award.
Unless otherwise determined by the Compensation Committee, all stock-based
awards that have not yet vested will automatically be forfeited upon the
termination of the participant's employment or service for any reason or no
reason.
Non-Employee Director Automatic Stock Option Awards. Under the 2000 Equity
Incentive Plan, each of Media Metrix' non-employee directors is automatically
granted an option to purchase 15,000
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<PAGE> 94
shares of common stock upon his or her commencement of service as a non-employee
director. In addition, each of Media Metrix' non-employee directors is
automatically granted an option to purchase 15,000 shares of common stock on the
trading day following each annual meeting of stockholders at which he or she is
re-elected to the board of directors, provided that the director has been
serving on the board of directors for at least six months. The options have a
ten-year term and an exercise price equal to the fair market value of the common
stock on the date of grant. The options granted to non-employee directors are
twenty-five percent vested on the date of grant and, while the director remains
in service, vest as to 1/36th of the remaining shares each month thereafter.
Each non-employee director who was a director on January 1, 2000 received a
one-time option grant to purchase 20,000 shares (rather than 15,000 shares) of
common stock on the first trading day following the 2000 Annual Stockholders
Meeting. Provisions similar to those described above with regard to
discretionary option grants apply upon a director's termination of service,
except that a non-employee director has one year to exercise then vested options
upon a termination of service due to disability, rather than six months, and has
six months to exercise then vested options following a termination of service
for any reason other than death, disability or cause, rather than ninety days.
Change in Control. The 2000 Equity Incentive Plan generally provides that,
unless the Compensation Committee determines otherwise at the time of grant, all
outstanding awards will become immediately vested and, if applicable,
exercisable upon or immediately prior to the completion of any merger or
consolidation in which Media Metrix is not the surviving corporation or which
results in the acquisition of all or substantially all of Media Metrix'
outstanding shares by a single person or entity or by a group of persons and/or
entities acting in concert, or in the event of the sale or transfer of all or
substantially all of Media Metrix' assets, provided that, in the case of options
or stock appreciation rights, such awards are not assumed or continued in full
force. The number of shares available under the 2000 Equity Incentive Plan and
the number of shares subject to each outstanding award and, if applicable, the
exercise price thereof shall be adjusted upon the occurrence of a stock split or
recapitalization of Media Metrix' common stock.
PLAN BENEFITS
As stated above, the Compensation Committee has the discretion to make all
determinations as to awards granted under the 2000 Equity Incentive Plan,
including the award recipients, the type of awards and the terms and conditions
of awards. For this reason, future benefits under the 2000 Equity Incentive Plan
cannot be determined. The closing price of Media Metrix common stock on July
[__], 2000 was $[____] per share.
The table below sets forth information regarding options to purchase Media
Metrix common stock outstanding under the 2000 Equity Incentive Plan as of
[______________], 2000. There are no awards outstanding under the 2000 Equity
Incentive Plan other than stock options.
<TABLE>
<CAPTION>
Number of
Stock Options
<S> <C>
Tod Johnson, Chief Executive Officer and Chairman of the Board...................[_______]
Mary Ann Packo, President and Chief Operating Officer............................[_______]
Steve Coffey, Executive Vice President...........................................[_______]
Thomas A. Lynch, Chief Financial Officer and Treasurer...........................[_______]
Doug McFarland, Senior Vice President, Sales.....................................[_______]
All current executive officers as a group ([ ] persons)........................[_______]
All current directors who are not executive officers as a
group ([ ] persons)..........................................................[_______]
</TABLE>
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<PAGE> 95
<TABLE>
<S> <C>
All employees, including all current officers who are not
executive officers, as a group ([ ] persons).................................[_______]
</TABLE>
FEDERAL INCOME TAX CONSEQUENCES UNDER THE 2000 EQUITY INCENTIVE PLAN
An optionee will not realize taxable income upon the grant of an option.
The holder of a non-statutory option will generally recognize ordinary income
upon the exercise of the option in an amount equal to the excess of the fair
market value of the common stock over the exercise price (i.e., the option
spread), and Media Metrix will generally receive a corresponding deduction. Upon
a later sale of the common stock, the optionee will recognize capital gain or
loss equal to the difference between the selling price and the sum of the
exercise price plus the amount of ordinary income realized on the exercise.
The holder of an incentive stock option will not realize taxable income
upon the grant or exercise of the option, although, upon exercise, the option
spread is includable as income for purposes of the alternative minimum tax. If
the common stock acquired upon exercise of an incentive stock option is sold or
otherwise disposed of within two years from the grant date or within one year
from the exercise date, then, in general, gain realized on the sale is treated
as ordinary income to the extent of the ordinary income that would have been
realized upon exercise if the option had been a non-statutory option, and Media
Metrix will generally receive a corresponding deduction. Any remaining gain is
treated as capital gain.
If the common stock acquired pursuant to the exercise of an incentive stock
option is held for at least two years from the grant date and one year from the
exercise date and the optionee is employed by Media Metrix, or its subsidiaries,
at all times beginning on the grant date and ending on the date three months,
or, in the case of disability, one year, prior to the exercise date, then all
gain or loss realized upon the sale will be capital gain or loss and Media
Metrix will not be entitled to a deduction. A special basis adjustment applies
to reduce the gain for alternative minimum tax purposes.
In general, Section 162(m) of the Internal Revenue Code denies a
publicly-held corporation a deduction for federal income tax purposes for
compensation paid in excess of $1,000,000 per year per person to its chief
executive officer and the four other officers whose compensation is disclosed in
its proxy statement, subject to certain exceptions. Although the 2000 Equity
Incentive Plan has been designed so that certain options, stock appreciation
rights, restricted stock and performance-based awards will qualify for an
exception from the above deduction limitation, it is possible that compensation
realized under the 2000 Equity Incentive Plan will not be deductible by Media
Metrix by reason of the executive compensation deduction limitation of Section
162(m) of the Code. Accordingly, although Media Metrix expects that the
Compensation Committee will take into consideration the non-deductibility of
compensation attributable to a particular award under the 2000 Equity Incentive
Plan, no assurance can be given that all or part of any this compensation will
be deductible by Media Metrix.
The 2000 Equity Incentive Plan is not, nor is it intended to be, qualified
under Section 401(a) of the Internal Revenue Code.
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AMENDMENT OF THE MEDIA METRIX
2000 EMPLOYEE STOCK PURCHASE PLAN
GENERAL
In May 2000, the board of directors of Media Metrix adopted the Media
Metrix 2000 Employee Stock Purchase Plan. Media Metrix' stockholders approved
the adoption of the 2000 Employee Stock Purchase Plan at the 2000 Annual
Stockholder's Meeting.
THE PROPOSED AMENDMENT TO THE 2000 EMPLOYEE STOCK PURCHASE PLAN
On July [__], 2000, Media Metrix' board of directors adopted, subject to
stockholder approval, an amendment to the 2000 Purchase Plan to increase the
maximum number of shares of Media Metrix common stock available for issuance
under the 2000 Purchase Plan during the term of the plan from 100,000 to
2,000,000. At the Media Metrix special stockholders meeting, stockholders of
Media Metrix are being asked to consider and vote upon the proposed amendment to
the 2000 Purchase Plan.
Through the 2000 Purchase Plan, Media Metrix encourages its employees to
increase their ownership of its common stock. The 2000 Purchase Plan permits
employees to purchase Media Metrix common stock at a discount through convenient
payroll deductions by means of successive offering periods under the plan. In
addition, favorable tax consequences may be available to participants in the
2000 Purchase Plan who hold the shares of common stock they purchase under the
2000 Purchase Plan for periods required by the Internal Revenue Code. The
amendment of the 2000 Purchase Plan to increase the number of shares of Media
Metrix common stock available for purchase under the plan will permit Media
Metrix to offer the plan to its larger employee base following the merger,
including employees of Jupiter who continue as employees of the combined
enterprise after the merger is completed. ACCORDINGLY, MEDIA METRIX' BOARD OF
DIRECTORS RECOMMENDS THAT MEDIA METRIX STOCKHOLDERS VOTE "FOR" APPROVAL OF THE
PROPOSED AMENDMENT TO THE 2000 PURCHASE PLAN.
If the proposed amendment to the 2000 Purchase Plan is approved, the
amendment will become effective as of July [__], 2000. If the proposed amendment
to the 2000 Purchase Plan is not approved by Media Metrix stockholders, the 2000
Purchase Plan will remain in effect with the terms existing prior to July [__],
2000. Because the 2000 Purchase Plan sets limits on the number of shares that an
employee can purchase in any offering period, the proposed amendment to the 2000
Equity Incentive Plan will not permit an employee to obtain greater benefits
under the 2000 Purchase Plan than prior to its amendment.
The principal provisions of the 2000 Purchase Plan are summarized below.
This summary, however, does not purport to be complete and is qualified in its
entirety by the terms of the 2000 Purchase Plan.
GENERAL DESCRIPTION OF THE 2000 EMPLOYEE STOCK PURCHASE PLAN
In general, each employee of Media Metrix or its subsidiaries, including
any officer or director who is also an employee, is eligible to participate in
the 2000 Purchase Plan commencing with the first offering period under the 2000
Purchase Plan coincident with or next following his or her completion of six
months of employment or, if such individual was hired on or before January 13,
2000, commencing with the first offering period under the 2000 Purchase Plan.
Employees who own, directly or indirectly, 5% or more of the voting power or
value of Media Metrix' or any of its subsidiary's stock, determined in
accordance with the rules of the Internal Revenue Service, are not eligible to
participate in the 2000 Purchase Plan. For purposes of the 2000 Purchase Plan, a
subsidiary is any corporation at least 50% of the stock of which is owned,
directly or indirectly, by Media Metrix.
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Participation in the 2000 Purchase Plan is completely voluntary. Eligible
employees who enroll in the 2000 Purchase Plan are required to designate the
portion of their base cash compensation, which is limited to 10%, to be withheld
during each offering period under the 2000 Purchase Plan. The first offering
period under the 2000 Purchase Plan commenced on July 1, 2000 and will have a
duration of 6 months. Unless changed, subsequent six month offering periods will
commence on January 1st and July 1st of each year during the term of the 2000
Purchase Plan. An employee's payroll deductions will be adjusted downward or
refunded to the extent necessary to ensure that he or she will not purchase
during any calendar year shares of Media Metrix common stock that have an
aggregate fair market value in excess of $25,000, determined in accordance with
the rules of the Internal Revenue Service.
The amount of an employee's payroll deductions under the 2000 Purchase Plan
will be credited to a bookkeeping account maintained in the employee's name. At
the end of each offering period, the amount credited to a participant's account
will be applied to the purchase of shares of Media Metrix common stock at a
price per share equal to the lesser of (1) 85% of the fair market value of Media
Metrix common stock on the first day of the offering period, or (2) 85% of the
fair market value of Media Metrix common stock on the last business day of the
offering period.
An employee may elect to terminate his or her participation during an
offering period. An employee's participation will automatically terminate upon
the termination of his or her employment with Media Metrix and its subsidiaries.
Upon termination of participation, payroll deductions will cease and the amount
credited to the participant's account will be paid in cash to the participant or
the participant's beneficiary. A participant who voluntarily withdraws from the
2000 Purchase Plan during an offering period may re-enroll for any subsequent
offering period for which he or she is an eligible employee.
Prior to the amendment of the 2000 Purchase Plan in July 2000, Media Metrix
could sell up to 100,000 shares of its common stock, as adjusted to reflect
stock splits and other capital changes, under the 2000 Purchase Plan. Following
the amendment of the 2000 Purchase Plan in July 2000 and assuming approval of
the amendment by Media Metrix stockholders, Media Metrix may sell up to
2,000,000 shares of its common stock, as adjusted to reflect stock splits and
other capital changes, under the 2000 Purchase Plan. The maximum number of
shares of Media Metrix common stock that any participant may purchase during any
offering period is 1,000 shares. Such shares may be authorized and unissued or
held in Media Metrix' treasury. We may also purchase shares for resale under the
2000 Purchase Plan.
The 2000 Purchase Plan provides that, unless Media Metrix' board of
directors determines otherwise, it will be administered by the Compensation
Committee, and, because the board of directors has not so provided, the
Compensation Committee currently administers the plan. Subject to the provisions
of the 2000 Purchase Plan, the Compensation Committee, acting in its sole and
absolute discretion, has full power and authority to construe, interpret and
apply the terms of the 2000 Purchase Plan.
The board of directors of Media Metrix may amend or terminate the 2000
Purchase Plan at any time. In the case of any amendment increasing the number of
shares of common stock which may be sold under the 2000 Purchase Plan, or in the
case of other amendments requiring stockholder approval in accordance with
applicable law, the amendment will be subject to the approval of Media Metrix'
stockholders.
PLAN BENEFITS
The number of shares of common stock that a participant may purchase under
the 2000 Purchase Plan depends upon the payroll deductions of a participant and
the price of Media Metrix common stock on the last day of an offering period,
but, as stated above, in no event may a participant purchase more than 1,000
shares in any offering period under the 2000 Purchase Plan. For this reason,
future benefits under
- 88 -
<PAGE> 98
the 2000 Purchase Plan cannot be determined. The closing price of Media Metrix
common stock on July [__], 2000 was $[____] per share.
FEDERAL TAX CONSEQUENCES UNDER THE 2000 PURCHASE PLAN
The 2000 Purchase Plan is intended to qualify as an "employee stock
purchase plan" within the meaning of Section 423 of the Internal Revenue Code.
Amounts withheld from an employee's pay under the 2000 Purchase Plan will be
taxable as ordinary income. No income is realized by an employee upon the
purchase of shares of Media Metrix common stock at the end of an offering
period. A participant may, however, realize ordinary income upon a sale or other
disposition of shares of common stock acquired under the 2000 Purchase Plan or
upon his or her death while owning shares of common stock acquired under the
2000 Purchase Plan.
In general, if the sale or other distribution of shares occurs more than
two years after the beginning of the offering period in which the shares are
acquired or if the participant dies while owning such shares, then gain, if any,
realized will be treated as ordinary income in an amount up to the lesser of (1)
the excess of the fair market value of the shares at the time of such
disposition or death over the amount paid for the shares or (2) the excess of
the fair market value of the shares at the beginning of the offering period over
the option price at the beginning of the offering period. The balance of the
gain, if any, will be treated as long-term capital gain.
If the sale or other disposition of shares acquired under the 2000 Purchase
Plan occurs within such two-year period, then the participant will realize
ordinary income equal to the 15% purchase price discount and the amount of the
ordinary income will be added to the employee's cost basis for the purpose of
determining the capital gain or loss realized on the sale or other disposition.
Jupiter Media Metrix will be entitled to a deduction equal to the ordinary
income realized by an employee who sells or otherwise disposes of shares
acquired under the 2000 Purchase Plan within the two year period.
The 2000 Purchase Plan is not, nor is it intended to be, qualified under
Section 401(a) of the Internal Revenue Code.
- 89 -
<PAGE> 99
UNAUDITED PRO FORMA CONDENSED COMBINING FINANCIAL INFORMATION
On June 26, 2000, Media Metrix and Jupiter entered into an agreement and
plan of merger. Under the agreement, Media Metrix is to issue 0.946 of a share
of Media Metrix common stock for every share of Jupiter common stock. The merger
is subject to, among other things, regulatory approval and the approval by
stockholders of both Media Metrix and Jupiter. The transaction is intended to be
accounted for as a purchase transaction. The share price used to determine the
acquisition cost was derived from taking the average of the closing price of
Media Metrix' common stock for the two days prior to and subsequent to the
announcement of the proposed merger, which was June 27, 2000.
The following unaudited pro forma condensed combining financial information
gives effect to the merger using the purchase method of accounting, after giving
effect to the pro forma adjustments described in the accompanying notes. The
unaudited pro forma condensed combining financial information should be read in
conjunction with the audited historical consolidated financial statements and
related notes thereto of Media Metrix and AdRelevance, which was acquired by
Media Metrix on October 8, 1999, and the audited historical consolidated
financial statements and related notes thereto of Jupiter, Internet Research
Group, which was acquired by Jupiter on March 16, 2000, and Net Market Makers,
which was acquired by Jupiter on April 14, 2000. The aforementioned acquisitions
were all accounted for under the purchase method of accounting. The audited
consolidated financial statements and related notes thereto of Media Metrix are
incorporated by reference into this joint proxy statement/prospectus. The
audited historical consolidated financial statements and related notes thereto
of Jupiter, and the audited historical financial statements and related notes
thereto of Internet Research Group, Net Market Makers and AdRelevance, may be
found starting at page F-1 of this joint proxy statement/prospectus.
The unaudited pro forma condensed combining balance sheet data as of March
31, 2000 gives effect to the acquisition of Net Market Makers by Jupiter and the
merger of Media Metrix and Jupiter as if they had occurred on March 31, 2000.
The unaudited pro forma condensed combining statement of operations for the
three months ended March 31, 2000 is presented to give effect to the
acquisitions of Internet Research Group and Net Market Makers by Jupiter and to
the merger of Media Metrix and Jupiter as if they occurred on January 1, 2000.
The unaudited pro forma condensed combining statement of operations for the year
ended December 31, 1999 is presented to give effect to the Jupiter acquisitions,
the Media Metrix acquisition of AdRelevance, and the merger of Media Metrix and
Jupiter as if they occurred on January 1, 1999.
The unaudited pro forma condensed combining financial statements are not
necessarily indicative of the results of operations or the financial position
which would have occurred had the Jupiter merger and the acquisitions of
AdRelevance, Internet Research Group and Net Market Makers been completed at
those times, nor are they necessarily indicative of future results of operations
or financial position. Management believes additional synergies and operational
improvements, not reflected in the accompanying unaudited pro forma condensed
combining statements of operations, will be realized by the combined enterprise.
These amounts cannot be reasonably quantified and, therefore, are not reflected
in the unaudited pro forma condensed combining statements of operations.
The allocation of the purchase price of Jupiter and Net Market Makers is
preliminary and does not reflect the fair value adjustments to their assets and
liabilities, since those amounts have not been finalized and have been estimated
at this time. The fair value of Jupiter's and Net Market Makers' assets and
liabilities will be determined as of the dates of the respective acquisitions
through independent appraisals, which will include appraisals of patents,
trademarks and trade names, and other analyses.
- 90 -
<PAGE> 100
Media Metrix, Inc./Jupiter Communications, Inc.
Unaudited Pro Forma Condensed Combining Balance Sheet
March 31, 2000
<TABLE>
<CAPTION>
PRO FORMA COMBINED JUPITER COMMUNICATIONS, INC.
---------------------------------------------------------
HISTORICAL JUPITER-NMM
HISTORICAL HISTORICAL NET MARKET PRO FORMA PRO FORMA PRO FORMA PRO FORMA
MEDIA METRIX JUPITER MAKERS ADJUSTMENTS JUPITER ADJUSTMENTS COMBINED
------------ ----------- ------------ ------------- ----------- ------------- -------------
ASSETS (IN THOUSANDS)
Current assets:
<S> <C> <C> <C> <C> <C> <C> <C>
Cash ..................... $86,552 $48,930 $1,505 $(20,600)(2) $29,835 $(15,000) (1) $101,387
Marketable securities .... 15,206 21,982 21,982 37,188
Receivables, less
allowance for
doubtful accounts ...... 8,968 20,839 1,368 22,207 31,175
Prepaid expenses and
other .................. 589 4,335 80 4,415 5,004
-------- -------- ------ ------ -------- -------- --------
Total current assets ....... 111,315 96,086 2,953 (20,600) 78,439 (15,000) 174,754
Property and equipment,
net ...................... 8,461 7,134 47 7,181 15,642
Intangibles, net ........... 54,610 24,549 28,910 (2) 53,459 367,505 (1) 475,574
Deferred tax assets ........ 1,269 1,269 1,000 (1) 2,269
Due from minority
interests in
consolidated
subsidiaries ............. 964 - 964
Other assets ............... 452 254 25 279 731
-------- -------- ------ ------ -------- -------- --------
Total assets ............... $175,802 $129,292 $3,025 $8,310 $140,627 $353,505 $669,934
======== ======== ====== ====== ======== ======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and
accrued liabilities .... $11,585 $10,727 $713 $11,440 $23,025
Advance billings to
clients/deferred
revenue ................ 7,038 33,095 1,901 34,996 42,034
Convertible note
payable ................ 1,442 1,442 1,442
Current portion of
long-term debt ......... 202 202
-------- -------- ------ -------- --------
Total current liabilities .. 18,825 45,264 2,614 47,878 66,703
Long-term debt ............. 120 - 120
Deferred rent .............. 149 149 149
Stockholders' equity:
Preferred stock
Common stock ............. 198 15 77 $(77)(2) 15 $132 (1) 345
Additional
paid-in-capital ........ 204,155 83,616 2,364 6,357 (2) 92,337 374,621 (1) 671,113
Accumulated other
comprehensive loss ..... (151) (1,187) (1,187) 1,187 (1) (151)
(Accumulated deficit)
retained earnings ...... (46,219) 1,904 (1,984) 1,984 (2) 1,904 (904) (1) (45,219)
Stockholder loans (46) 46 (2) - -
Deferred compensation .... (1,126) (469) (469) (21,531) (1) (23,126)
-------- -------- ------ ------ -------- -------- --------
Total stockholders'
equity ................... 156,857 83,879 411 8,310 92,600 353,505 602,962
-------- -------- ------ ------ -------- -------- --------
Total liabilities and
stockholders' equity ..... $175,802 $129,292 $3,025 $8,310 $140,627 $353,505 $669,934
======== ======== ====== ====== ======== ======== ========
</TABLE>
See accompanying notes.
- 91 -
<PAGE> 101
Media Metrix, Inc./Jupiter Communications, Inc.
Unaudited Pro Forma Condensed Combining Statement of Operations
Three Months Ended March 31, 2000
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
MEDIA JUPITER PRO FORMA PRO FORMA
METRIX COMMUNICATIONS ADJUSTMENTS COMBINED
---------- -------------- ----------- ---------
(From pg. 93)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues ......................... $ 10,204 $ 19,954 $ 30,158
Costs of services ............... 4,411 8,363 12,774
-------- -------- --------
Gross profit .................... 5,793 11,591 17,384
Operating expenses:
Research and development ..... 2,916 -- 2,916
Sales and marketing .......... 4,129 5,227 9,356
General and administrative ... 3,089 6,505 9,594
Amortization of deferred
compensation and other
stock-based compensation .. 282 1,619 $ 1,900(3) 3,801
Amortization of intangibles .. 5,565 1,942 18,375(4) 25,882
-------- -------- -------- --------
Total operating expenses ......... 15,981 15,293 20,275 51,549
-------- -------- -------- --------
Loss from operations ............. (10,188) (3,702) (20,275) (34,165)
Interest income, net of interest
expense ........................ 1,601 504 2,105
Gain on sale of investments ...... -- 5,894 5,894
-------- -------- --------
Income (loss) before income taxes
and minority interest ........ (8,587) 2,696 (20,275) (26,166)
Income tax expense ............... -- 2,959 (3,959)(5) (1,000)
-------- -------- -------- --------
Loss before minority interest .... (8,587) (263) (16,316) (25,166)
Minority interest ................ 478 -- 478
-------- -------- -------- --------
Net loss ......................... $ (8,109) $ (263) $(16,316) $(24,688)
======== ======== ======== ========
Net loss per share:
Basic ........................ $ (0.41) $ (0.02) $ (0.72)
======== ======== ========
Diluted ...................... $ (0.41) $ (0.02) $ (0.72)
======== ======== ========
Shares used in the calculations of
net loss per share:
Basic ........................ 19,718 15,362 (652)(6) 34,428
======== ======== ======== ========
Diluted ...................... 19,718 15,362 (652)(6) 34,428
======== ======== ======== ========
</TABLE>
See accompanying notes.
- 92 -
<PAGE> 102
Jupiter Communications, Inc.
Unaudited Pro Forma Condensed Combining Statement of Operations
Three Months Ended March 31, 2000
<TABLE>
<CAPTION>
HISTORICAL
--------------------------------------------
JUPITER INTERNET NET MARKET PRO FORMA
COMMUNICATIONS RESEARCH GROUP MAKERS ADJUSTMENTS PRO FORMA
-------------- -------------- ---------- ----------- -----------
(To pg. 92)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Revenues from sales of services . $ 17,160 $ 1,195 $ 1,599 $ 19,954
Costs of services ............... 6,665 995 703 8,363
-------- -------- -------- --------
Gross profit .................... 10,495 200 896 11,591
Operating expenses:
Sales and marketing .......... 5,209 18 585 5,227
General and administrative ... 5,179 333 $ 408(7) 6,505
Depreciation and amortization
of fixed assets ............ 398 6 4 (408)(7)
Stock-based compensation ... 1,619 1,619
Amortization of intangibles .. 483 1,459(8) 1,942
Acquired in-process research
and development ............
-------- -------- -------- -------- --------
Total operating expenses ........ 11,269 357 2,208 1,459 15,293
-------- -------- -------- -------- --------
Loss from operations ............ (774) (157) (1,312) (1,459) (3,702)
Interest income, net of interest
expense ...................... 909 8 (413)(9) 504
Gain on sale of investments ..... 5,894 -- 5,894
-------- -------- -------- -------- --------
Income (loss) before income taxes 6,029 (157) (1,304) (1,872) 2,696
Income tax expense .............. 2,835 124 2,959
-------- -------- -------- -------- --------
Net income (loss) ............... $ 3,194 $ (157) $ (1,428) $ (1,872) $ (263)
======== ======== ======== ======== ========
Net income (loss) per share:
Basic ...................... $ 0.22 $ (.02)
======== ========
Diluted .................... $ 0.20 $ (.02)
======== ========
Shares used in the calculations
of net income (loss) per share:
Basic ...................... 14,603 759(10) 15,362
======== ======== ========
Diluted .................... 15,901 (539)(10) 15,362
======== ======== ========
</TABLE>
See accompanying notes.
- 93 -
<PAGE> 103
Media Metrix, Inc./Jupiter Communications, Inc.
Unaudited Pro Forma Condensed Combining Statement of Operations
Year Ended December 31, 1999
<TABLE>
<CAPTION>
PRO FORMA
MEDIA JUPITER PRO FORMA PRO FORMA
METRIX COMMUNICATIONS ADJUSTMENTS COMBINED
(From pg. 95) (From pg. 96)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues .................................... $ 20,503 $ 44,879 $ 65,382
Cost of Services ............................ 10,291 21,586 31,877
--------- --------- ---------
Gross profit ................................ 10,212 23,293 33,505
Operating expenses:
Research and development ................. 5,862 -- 5,862
Sales and marketing ...................... 9,341 11,384 20,725
General and administrative ............... 7,645 12,413 20,058
Amortization of deferred compensation
and other stock-based compensation ..... 1,981 1,709 $ 7,600(11) 11,290
Amortization of intangibles .............. 20,893 6,635 73,501(12) 101,029
Acquired in-process research and
development ............................ 6,800 6,800
--------- --------- --------- ---------
Total operating expenses .................... 52,522 32,141 81,101 165,764
--------- --------- --------- ---------
Loss from operations ........................ (42,310) (8,848) (81,101) (132,259)
Interest income (expense), net .............. 2,279 (899) 1,380
--------- --------- --------- ---------
Loss before income taxes and minority
interest ................................. (40,031) (9,747) (81,101) (130,879)
Income tax benefit (expense) ................ 191 (191)(13) --
--------- --------- --------- ---------
Loss before minority interest ............... (40,031) (9,556) (81,292) (130,879)
Minority interest ........................... 1,689 1,689
--------- --------- --------- ---------
Net loss .................................... (38,342) (9,556) (81,292) (129,190)
Preferred stock dividends ................... (109) (109)
--------- --------- --------- ---------
Net loss applicable to common stockholders... $ (38,451) $ (9,556) $ (81,292) $(129,299)
========= ========= ========= =========
Basic and diluted net loss per share
applicable to common stockholders ........ $ (2.27) $ (0.77) $ (4.08)
========= ========= =========
Shares used in the calculations of basic
and diluted net loss per share
applicable to common stockholders ........ 16,973 12,421 2,289(14) 31,683
========= ========= ========= =========
</TABLE>
See accompanying notes
- 94 -
<PAGE> 104
Media Metrix, Inc.
Unaudited Pro Forma Condensed Combining Statement of Operations
Year Ended December 31, 1999
<TABLE>
<CAPTION>
HISTORICAL
------------------------
MEDIA PRO FORMA
METRIX AD RELEVANCE ADJUSTMENT PRO FORMA
(To pg. 94)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues ................................... $ 20,500 $ 3 $ 20,503
Cost of Services ........................... 10,291 -- 10,291
-------- -------- --------
Gross profit ............................... 10,209 3 10,212
Operating expenses:
Research and development ................ 5,044 818 5,862
Sales and marketing ..................... 9,117 224 9,341
General and administrative .............. 6,756 856 $ 33(15) 7,645
Amortization of deferred compensation and
other stock-based compensation ........ 1,060 921 1,981
Amortization of intangibles ............. 7,312 13,581(16) 20,893
Acquired in-process research and
development ........................... 6,800 6,800
-------- -------- -------- --------
Total operating expenses ................... 36,089 2,819 13,614 52,522
-------- -------- -------- --------
Loss from operations ....................... (25,880) (2,816) (13,614) (42,310)
Interest income (expense), net ............. 2,283 (4) 2,279
Minority interest .......................... 1,689 1,689
-------- -------- -------- --------
Net loss ................................... (21,908) (2,820) (13,614) (38,342)
Preferred stock dividends .................. (109) (109)
-------- -------- -------- --------
Net loss applicable to common stockholders . $(22,017) $ (2,820) $(13,614) $(38,451)
======== ======== ======== ========
Basic and diluted net loss per share
applicable to common stockholders ....... $ (1.34) $ (2.27)
======== ========
Shares used in the calculations of basic and
diluted net loss per share applicable to
common stockholders ..................... 16,445 528(17) 16,973
======== ======== ========
</TABLE>
See accompanying notes.
- 95 -
<PAGE> 105
Jupiter Communications, Inc.
Unaudited Pro Forma Condensed Combining Statement of Operations
Year Ended December 31, 1999
<TABLE>
<CAPTION>
HISTORICAL
----------------------------------------------
JUPITER INTERNET NET MARKET PRO FORMA
COMMUNICATIONS RESEARCH GROUP MAKERS ADJUSTMENT PRO FORMA
(IN THOUSANDS, EXCEPT PER SHARE DATA) (To pg. 94)
<S> <C> <C> <C> <C> <C>
Revenues from sales of services . $ 38,084 $ 3,827 $ 2,968 $ 44,879
Costs of services ............... 16,898 3,087 1,602 21,586
-------- -------- -------- --------
Gross profit .................... 21,186 740 1,366 23,293
Operating expenses:
Sales and marketing .......... 11,384 11,384
General and administrative ... 10,099 735 729 850(18) 12,413
Depreciation and amortization
of fixed assets ............ 850 (850)(18) --
Amortization of deferred
compensation and other
stock-based compensation ... 963 746 1,709
Amortization of intangibles .. 428 29 1 6,177(19) 6,635
-------- -------- -------- -------- --------
Total operating expenses ........ 22,761 1,727 1,476 6,177 32,141
-------- -------- -------- -------- --------
Loss from operations ............ (1,575) (986) (110) (6,177) (8,848)
Interest income, net of interest
expense ...................... 743 (2) 10 (1,650)(20) (899)
-------- -------- -------- -------- --------
Loss before income taxes ........ (832) (988) (100) (7,827) (9,747)
Income tax benefit (expense) .... 202 (1) (10) 191
-------- -------- -------- -------- --------
Net loss ........................ $ (630) $ (989) $ (110) $ (7,827) $ (9,556)
======== ======== ======== ======== ========
Basic and diluted net loss per
share ........................ $ (0.05) $ (0.77)
======== ========
Shares used in the calculation of
basic and diluted net loss per
share ......................... 11,565 856(21) 12,421
======== ======== ========
</TABLE>
See accompanying notes
- 96 -
<PAGE> 106
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINING FINANCIAL STATEMENTS
(1) To record the issuance of 0.946 of a share of Media Metrix common stock
for each share of Jupiter common stock outstanding in connection with the
merger of Media Metrix and Jupiter as if the merger occurred on March 31,
2000. The actual number of shares of Media Metrix common stock to be
issued will be determined at the effective date of the merger based on
the actual number of shares of Jupiter common stock outstanding at such
date. The calculation of estimated purchase price and preliminary
allocation to the net assets of Jupiter were determined as follows and
are used for illustrative pro forma purposes only:
<TABLE>
CALCULATION OF ESTIMATED PURCHASE PRICE:
<S> <C>
Estimated number of shares to be issued 14,710,000
Average share price of Media Metrix common stock
two days before and two days after
the merger announcement $ 25.50
--------------
Fair value of estimated common stock to be issued $ 375,105,000
Fair value of Jupiter options to be assumed
by Media Metrix 92,000,000
Intrinsic value of unvested options (recorded as deferred
compensation) (22,000,000)
Estimated merger costs 15,000,000
--------------
Estimated purchase price $ 460,105,000
--------------
Preliminary allocation of purchase price:
Net book value of Jupiter's pro forma net assets $ 92,600,000
Goodwill and other intangibles 367,505,000
--------------
$ 460,105,000
==============
</TABLE>
As a result of the merger, $1,000,000 of valuation allowance related to
Media Metrix' deferred tax assets has been reversed.
(2) To record the April 14, 2000 acquisition of Net Market Makers by Jupiter
as if it occurred on March 31, 2000. The acquisition cost of $29.3
million was payable $20.6 million in cash, including $100,000 of
acquisition costs, and 274,680 shares of Jupiter common stock valued at
$8.7 million. The following represents the preliminary allocation of
purchase price which is used for illustrative pro forma purposes only:
<TABLE>
<S> <C>
Net book value of Net Market Makers' net assets $ 411,000
Goodwill and other intangibles 28,910,000
-----------
$29,321,000
===========
</TABLE>
(3) To record amortization of deferred compensation of $22,000,000 or
$1,900,000 for the three months ended March 31, 2000.
(4) To record amortization of goodwill and other intangibles related to the
merger of $367,505,000 over five years ($18,375,000 per quarter)
(5) To eliminate Jupiter's income taxes as a result of the loss of Media
Metrix and to reverse $1,000,000 of Media Metrix' valuation allowance.
- 97 -
<PAGE> 107
(6) To reflect the issuance of 14,710,000 shares of Media Metrix common
stock to Jupiter stockholders as if the merger occurred on January 1,
2000 and to eliminate the weighted average Jupiter shares outstanding.
(7) To reclassify Jupiter depreciation and amortization of fixed assets for
consistency with Media Metrix presentation.
(8) To record amortization of the goodwill and other intangibles of $20.5
million and $28.9 million over ten and seven years for the Jupiter
acquisitions of Internet Research Group and Net Market Makers,
respectively, as if they occurred January 1, 2000.
(9) To record the reduction of interest income and/or increase in interest
expense on the $20.6 million of cash paid on the acquisition of Net
Market Makers.
(10) To reflect the issuance of 581,044 and 274,680 shares of Jupiter common
stock to the Internet Research Group and Net Market Makers
stockholders, respectively, as if the acquisitions occurred January 1,
2000 weighted through the date of acquisition by Jupiter and, for the
dilutive calculation, to eliminate Jupiter's common stock equivalents
due to the pro forma net loss.
(11) To record amortization of deferred compensation of $22,000,000 or
$7,600,000 for the year ended December 31, 1999.
(12) To record amortization of goodwill and other intangibles related to the
merger of $367,505,000 over five years ($73,501,000 per year)
(13) To eliminate (or reduce) Jupiter's income taxes as a result of the loss
of Media Metrix.
(14) To reflect the issuance of 14,710,000 shares of Media Metrix common
stock to Jupiter stockholders as if the merger occurred on January 1,
1999 and to eliminate the weighted average Jupiter shares outstanding.
(15) To record depreciation on the write-up of the fair value of fixed
assets acquired ($131,000) over three years.
(16) To record amortization of intangibles ($54.3 million) over three years
($13,581,000 for the year ended December 31, 1999).
(17) To reflect the issuance of 697,678 shares of Media Metrix common stock
to the AdRelevance stockholders as of January 1, 1999 weighted through
the date of acquisition by Media Metrix.
(18) To reclassify Jupiter depreciation and amortization of fixed assets for
consistency with Media Metrix presentation.
(19) To record amortization of the goodwill and other intangibles of $20.5
million and $28.9 million over ten and seven years for the Jupiter
acquisitions of Internet Research Group and Net Market Makers,
respectively, as if they occurred January 1, 1999.
(20) To record the reduction of interest income and/or increase in interest
expense on the $20.6 million of cash paid on the acquisition of Net
Market Makers.
- 98 -
<PAGE> 108
(21) To reflect the issuance of 581,044 and 274,680 shares of Jupiter common
stock to the Internet Research Group and Net Market Makers
stockholders, respectively, as if the acquisitions occurred January 1,
1999.
- 99 -
<PAGE> 109
COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION
Market Prices and Dividends
Media Metrix common stock is listed on the Nasdaq National Market under the
symbol "MMXI". Jupiter common stock is listed on the Nasdaq National Market
under the symbol "JPTR".
The table below sets forth, for the periods indicated, the high and low
sale prices of Media Metrix common stock and Jupiter common stock as reported on
the Nasdaq National Market, based on published financial sources. Neither Media
Metrix nor Jupiter pays dividends on its common stock.
<TABLE>
<CAPTION>
MEDIA METRIX COMMON STOCK JUPITER COMMON STOCK
HIGH LOW HIGH LOW
<S> <C> <C> <C> <C>
1999:
First Fiscal Quarter -- -- -- --
Second Fiscal Quarter (1) $ 56.625 $ 32.000 -- --
Third Fiscal Quarter $ 69.875 $ 34.250 -- --
Fourth Fiscal Quarter(2) $ 65.875 $ 32.500 $ 47.380 $ 31.00
2000:
First Fiscal Quarter $ 46.125 $ 29.000 $ 41.000 $ 17.250
Second Fiscal Quarter $ 43.00 $ 21.250 $ 33.1875 $ 19.125
Third Fiscal Quarter (through [____
__], 2000) $[ . ] $ [ . ] $[ . ] $[ . ]
</TABLE>
----------------------------
(1) For Media Metrix, commencing May 7, 1999, the first day on which Media
Metrix common stock was publicly traded.
(2) For Jupiter, commencing October 8, 1999, the first day on which Jupiter
common stock was publicly traded.
On June 26, 2000, the last full trading day prior to the public
announcement of the proposed merger, the closing prices of Media Metrix common
stock and of Jupiter common stock as reported on Nasdaq National Market were
$28.25 and $23.00 per share, respectively. On [____ __], 2000, the last trading
date prior to the date of this joint proxy statement/prospectus, the closing
prices of Media Metrix common stock and of Jupiter common stock as reported on
the Nasdaq National Market were $[____] and $[____] per share, respectively.
Stockholders should obtain current market quotations prior to making any
decision with respect to the merger.
Post-Merger Dividend Policy
Media Metrix has never declared or paid any cash dividends on its
common stock and does not anticipate declaring or paying dividends on its common
stock in the foreseeable future.
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<PAGE> 110
THE BUSINESS OF MEDIA METRIX, INC.
Media Metrix is a leading provider of Internet and Digital Media
measurement products and services. Media Metrix measures usage of the entire
digital landscape, including its largest segments: the World Wide Web,
proprietary online services like America Online, software, instant messaging
applications and other digital applications. In January 1996, Media Metrix
released the first World Wide Web Audience Measurement report. Today, Media
Metrix offers a range of Internet audience, e-commerce, advertising, and
technology measurement services to leading Internet advertisers, advertising
agencies, media companies, technology companies and financial institutions.
Media Metrix' products and services enable the continued growth and development
of the Internet by providing third-party measurement data that its customers
rely on to make critical business decisions. Its data are used to buy, sell and
plan advertising, support marketing and commerce initiatives, assess
partnerships and distribution strategies and analyze competitors.
Media Metrix collects Internet audience data by measuring Internet usage
from representative samples, or panels, of personal computer users with its
proprietary tracking technology. Media Metrix maintains large panels of randomly
selected individuals, reporting Internet usage at home and at work. Panelists
are randomly recruited to participate in the Media Metrix sample. They are
required to fill out a detailed questionnaire to provide background demographic
information at the individual and household level. Panelists download and
install Media Metrix' tracking software onto their PCs. The tracking software
tracks all PC usage at the individual user level. The tracking software follows
the panelists, page-by-page, minute-by-minute, click-by-click, as they use their
PCs. Media Metrix collects these usage data from the panelists' personal
computers and transmits them to its data collection center for processing. The
data are used to construct several databases, and they provide the foundation
for Media Metrix' products and services.
Media Metrix also offers Internet advertising measurement products and
services through its subsidiary, AdRelevance. AdRelevance specializes in the
automated retrieval and analysis of online advertising. Using intelligent agent
technology, the AdRelevance system scours the Internet, retrieving
advertisements. Upon retrieval, ads are analyzed, classified and added to the
AdRelevance database, providing advertisers, agencies and publishers with
marketing intelligence, including when, how and how much their competitors are
marketing and advertising on the Internet.
Media Metrix is based in New York City, with operations in the United
States, the United Kingdom, France, Germany, Sweden, Australia, Canada, Latin
America, and Japan.
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<PAGE> 111
THE BUSINESS OF JUPITER COMMUNICATIONS, INC.
OVERVIEW
Jupiter provides research and advice on Internet commerce. Senior
executives at client companies utilize Jupiter's research to make informed
business decisions in a complex and rapidly changing Internet economy. Jupiter's
research, which focuses solely on the global Internet economy, provides
Jupiter's clients with comprehensive views of industry trends, forecasts and
best practices. Jupiter's analysis and advice, supported by extensive
proprietary data, emphasizes specific, actionable findings that enable companies
to develop effective business strategies for Internet commerce, and to utilize
the Internet to more effectively operate their businesses. Jupiter also produces
a wide range of conferences which offer senior executives the opportunity to
hear first-hand the insights of Jupiter's analysts and the leading decision
makers in the Internet and technology industries.
Jupiter provides its research services primarily through annual
subscriptions to Jupiter Research Services. Jupiter Research Services is a
combination of proprietary written analysis, supporting data and access to
Jupiter's analysts. Jupiter delivers its services primarily over the Internet.
Jupiter's Web site offers clients easy access to Jupiter's research, products
that deliver customized views of Jupiter's data and analysis and the ability to
efficiently communicate with Jupiter's analysts. Jupiter offers 35 Research
Services, which, as of June 30, 2000, are generated by 68 research analysts. Ten
of Jupiter's 35 Research Services are new this year. Jupiter's research is
informed and supported by a dedicated data research group.
Jupiter has a highly diversified and global client base, including
traditional companies, companies solely focused on the Internet and the
suppliers and vendors that service them. Jupiter has substantially increased the
number of Research Services clients and Jupiter's total contract value, which is
the annualized value of all Research Services contracts at a given point in
time. As of March 31, 2000, Jupiter had 1,158 client contracts for its Research
Services, an increase from 421 on December 31, 1998 and 987 on December 31,
1999. Jupiter's total contract value has increased from $11.7 million on
December 31, 1998 to $40.1 million on December 31, 1999 to $50.5 million on
March 31, 2000. In addition, approximately 76% of the Research Services
contracts that expired during 1999 were renewed and approximately 97% of these
contracts were renewed for an equal or larger dollar amount.
Jupiter's conference revenues increased 130% to $11.3 million in 1999 from
$4.9 million in 1998. Approximately 75% of the 6,576 paid attendees for
Jupiter's conferences held in 1999 were not Research Services clients. As a
result, these conferences provide a unique opportunity to market and sell
Jupiter Research Services to potential clients. These conferences also allow
Jupiter to increase the public profile of its analysts, generate favorable press
and otherwise promote the Jupiter brand.
JUPITER RESEARCH SERVICES
Jupiter Research Services provides Jupiter's clients with a wide range of
proprietary research, data and advisory analysis and is structured as a
continuous analytical service. Jupiter has designed its Research Services to
enable companies to make intelligent business decisions about Internet commerce
and consumer and business use of the Internet and related technologies. These
research products and services define business and strategic goals, identify
revenue opportunities, evaluate business models, analyze marketing strategies,
assess enabling technologies and provide advice on organizational
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structures and vendor selections. The size of Jupiter Research Services
contracts varies depending on the number of Research Services that are purchased
and the number and type of users at the client company.
A key component of Jupiter Research Services is access to Jupiter's
research analysts for discussions and debate related to their research topics.
Jupiter's clients typically seek advice or have questions regarding new business
or marketing initiatives, best practices, new opportunities or competitive
threats, market forecasts and/or the value of mergers and strategic
partnerships. To facilitate the efficiency of this inquiry, clients submit
issues or questions initially to Jupiter's dedicated client inquiry staff via
telephone or e-mail. The client inquiry staff, which consists of trained
research professionals who are familiar with all of Jupiter's products and
services, coordinates the responses and actively manages access to the analysts.
Jupiter continually evaluates the market demand for additional Research
Services. Jupiter seeks out and receives input from its research analysts, the
sales representatives that are in constant contact with existing and potential
clients and its marketing staff as to the demand for specific research and
Jupiter's ability to provide coverage. Jupiter also examines a variety of
empirical data, including breadth of applicability, uniqueness of the offering,
competitive value and ease of communication.
Jupiter divides its Research Services into Internet Strategies, which
offers broad prescriptive advice relevant to all online ventures, and Market
Strategies, which targets specific industries and geographic regions.
JUPITER RESEARCH SERVICES
<TABLE>
<S> <C>
INTERNET MARKET
STRATEGIES STRATEGIES
MARKETING &
REVENUE INDUSTRIES
---------------------------------
OPERATIONS & INFRASTRUCTURE
--------------------------------- --------------------------------
TECHNOLOGY &
PLATFORMS REGIONS
---------------------------------
EXECUTIVE
MANAGEMENT
</TABLE>
Jupiter further classifies these Research Services into the following six
categories:
- Marketing & Revenue: Provides analysis and data required to create
business plans for the Internet economy. These services focus on online
distribution dynamics, Internet revenue opportunities and interactive
sales and marketing strategies.
- Operations & Infrastructure: Provides management strategies, cost
metrics, vendor evaluations and best practices to drive business
decisions and improve operating results. These services analyze the
operations, infrastructure and personnel investment required of
Internet businesses.
- Technology & Platforms: Identifies and predicts critical developments
in consumer, site and business adoption of new applications,
technologies and platforms. These services analyze the
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business need and opportunities surrounding developments such as
wireless Internet access, digital distribution of music and broadband
applications.
- Executive Management: Jupiter's MindShare Senior Executive Program is
specifically targeted at chief executive officers and other senior
executives across all industries. This service analyzes the most
important trends in the Internet economy, providing insight, direction
and vision to senior executives into both major corporations and
Internet start-ups. MindShare provides analysis and data that will
drive major shifts in corporate strategy resulting from Internet
opportunities and threats.
- Industries: Provides analysis and insights into the particular issues
that companies face as the Internet transforms the vertical industries
in which they operate. These services provide the unique perspective,
detailed data, industry forecasts and benchmark studies to make key
business decisions in a particular industry or competitive environment.
- Regions: Provides analysis and data specific to important and growing
regions in the Internet economy. These services identify market
opportunities, competitive dynamics and consumer online behavior in
various countries and regions. Two critical components of these
services are the consumer survey data and market forecasts that provide
both domestic and foreign corporations the region-specific analysis
required to make strategic planning decisions.
The following is a listing of the Research Services in each category and
sample or standardized reports:
INTERNET STRATEGY SERVICES
<TABLE>
<CAPTION>
MARKETING & REVENUE SAMPLE REPORTS
<S> <C>
B-to-B Commerce Supplier Strategies: Regaining Lost Leverage in the Internet Supply Chain
Content & Programming Licensing and Syndication: Weighing Distribution Against Dollars
Digital Commerce Loyalty: Driving Repeat Transactions
Online Advertising Direct E-mail: Driving Cost-Effective Response
Net Markets B-to-B Trade Projections
OPERATIONS & INFRASTRUCTURE SAMPLE REPORTS
B-to-B Infrastructure Pricing and Payment: B-to-B Strategies
Commerce Infrastructure Transaction Scaling: Identifying Investments to Enable Explosive Growth
Content Infrastructure The Future of Caching: Efficiency Trade-Offs in Local versus Networked
Content Storage
Customer Service Utilizing Customer Data to Drive Competitive Customer Service
Site Operations Staffing and Organizational Structures: Creating Groups with Distinct
Business Functions
TECHNOLOGY & PLATFORMS SAMPLE REPORTS
Broadband & Wireless Mobile Web Access: Overcoming Wireless Walled Gardens
Digital Television Internet Television: Optimizing for a New Medium
Web Technology Web Media: Confronting the Limitations of Online Video
EXECUTIVE MANAGEMENT SAMPLE REPORTS
Mindshare: Senior Executive Program Where Internet Business Units Fit (or don't fit) in the Overall Corporate
Structure
</TABLE>
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<PAGE> 114
MARKET STRATEGY SERVICES
<TABLE>
<CAPTION>
INDUSTRIES STANDARDIZED REPORTS*
<S> <C>
Auctions & Classifieds
Automotive
Consumer Goods Online Landscape: Competition & Market Evolution
Financial Services
Government Market Projections, 2000-2004
Health
Music Case Studies: Best Practices
Real Estate
Retailing Case Studies: Best Practices
Teen & Kids
Travel
REGIONS STANDARDIZED REPORTS*
European Commerce & Marketing
European Technology & Operations Online Landscape: Competition & Market Evolution
Australia
Canada Market Projections, 2000-2004
France
Germany Case Studies: Best Practices
Japan
Latin America Benchmarking Reports
Scandinavia
United Kingdom
</TABLE>
* Some market strategy services only receive benchmarking reports
The Research Services program is designed to provide business executives
with the most up-to-date research and analysis. Jupiter provides written reports
on a regular basis as well as ongoing access to its research analysts in order
to answer specific questions or clarify information relating to the practice
topic. Specifically, clients receive some or all of the following:
- Analyst Reports. Vision Reports (about 20 pages) examine industries,
trends or business models while providing clients with prescriptive and
analytical direction. Concept Reports (about 4 pages) are more frequent
reports that cover both topical and strategic issues.
- Analyst Access. Access to Jupiter's research analysts for discussion,
debate and additional advice.
- Digital Notes. "JupTakes" cover current key events in their respective
fields, and "JupiterViews" aggregate research from every Jupiter
service to highlight Jupiter's perspective on major events.
- Digital Access. Password-only access to current research and a
fully-searchable archive, which includes research, company profiles and
slides from analyst presentations. Jupiter's cross referencing feature
provides easy access to related research, and Jupiter's new data
library allows clients to search and browse forecasts, consumer and
executive surveys and other information from Jupiter's expanding data
library. Digital access to Jupiter's Web site also includes a weekly
"JupMail" e-mail that updates clients on recent research and upcoming
events.
- Monthly Teleconferences. Each month, the research analysts from each of
the practices conduct a "JupTel" telephone conference call that
outlines the key findings from a recent analyst report.
- Conference Passes. A specified number of passes to Jupiter's
conferences.
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<PAGE> 115
JUPITER CONFERENCES
Jupiter produces a wide range of conferences which provide comprehensive
coverage of issues relating to Internet commerce. These conferences offer senior
executives the opportunity to hear first-hand the insights of Jupiter's analysts
and the leading decision makers in the Internet and technology industries.
Jupiter's events, which typically run for two to three days, provide an
excellent opportunity to showcase Jupiter's research to current and potential
clients, increase the public profile of Jupiter's research analysts, generate
favorable press and otherwise promote the Jupiter brand. Since approximately 70%
of the current attendees at Jupiter's conferences are not Research Services
clients, these events provide a unique opportunity to promote Jupiter's research
products and services to potential customers. As a result, Jupiter's marketing
staff and sales representatives attend each of the events and conduct continuous
promotional and direct sales efforts targeted at potential clients. Jupiter
believes that its events and the sales and marketing efforts at these events
have resulted in numerous Research Services contracts.
Jupiter's conferences, located throughout the world, are notable for the
senior level of attendees from all sectors of the online and traditional
industries. Jupiter produced eight conferences in 1997, nine conferences in 1998
and ten conferences in 1999. Jupiter has scheduled 21 conferences for calendar
year 2000, 12 of which are large events and nine of which are small events. Paid
attendance at Jupiter's large events typically ranges from 800 to 1,500
participants, while paid attendance at its small events typically ranges from
300 to 600 participants. Jupiter also solicits sponsors and exhibitors for each
of Jupiter's events. Exhibitors each receive a booth at the conference to
promote their company and are also listed in the conference program. Sponsors
receive prominent display of their corporate logos in the conference program and
the main meeting hall of the conference, and may host a reception during the
conference. Jupiter typically has approximately 50 to 75 sponsors and exhibitors
at its large events and 25 sponsors and exhibitors at its small events.
Jupiter has successfully increased attendance at its various conferences
over the past few years. For example, the total number of paid attendees at
Jupiter's 1999 conferences was 6,576, approximately 100% above the total number
of paid attendees for its 1998 conferences.
The following is a list of the 21 events scheduled for 2000, 15 in the
United States and six in Europe and Asia, and the year the conference was or
will be first held:
<TABLE>
<CAPTION>
CONFERENCE YEAR FIRST HELD
---------- ---------------
<S> <C>
Consumer Online Forum 1994
Digital Kids 1995
Consumer Online Forum Europe 1995
Plug.In: The Jupiter Online Music Forum 1996
Online Advertising Forum 1996
Travel: The Jupiter Online Travel Forum 1997
Shopping Forum 1998
Financial Services Forum 1998
MindShare: The Jupiter Executive Forum 1999
Online Entertainment Forum 1999
Online Health Forum 2000
Internet Commerce Forum Latin America 2000
Shopping Forum Europe 2000
</TABLE>
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<PAGE> 116
<TABLE>
<S> <C>
Global Online Advertising Forum 2000
B-to-B Commerce Forum 2000
Internet Commerce Forum Scandinavia 2000
Internet Commerce Forum Australia 2000
ground.zero3 2000
ground.zero4 2000
ground.zero Europe 2000
First Mover Advantage 2000
</TABLE>
As Internet commerce continues to grow, Jupiter anticipates that it will
expand the number of events that it produces as well as attract higher
attendance at its conferences. Jupiter also expects to devote more resources to
promoting events outside the United States or events with more of an
international focus.
CUSTOM AND OTHER RESEARCH
Jupiter also provides other research products and services to clients,
including book-length research reports and customized research.
Jupiter annually publishes between 10 to 20 book-length research studies
that are available for purchase through direct mail or on Jupiter's Web site.
Sales of these studies are an important way to expose new companies and
executives to Jupiter's research.
Jupiter also performs customized, client-focused research projects relating
to Internet commerce on a limited basis. These projects allow Jupiter's clients
to take advantage of the knowledge and experience of Jupiter's research analysts
and to develop structured, detailed responses to specific issues relevant to
their business. Custom studies often form the basis to explore a new Research
Service and, like Jupiter's book-length studies, are an effective way to expose
new companies and executives to Jupiter's research products and services.
CLIENTS
Jupiter's client base has rapidly expanded since Jupiter launched its
Research Services. In addition, Jupiter's client base has diversified from
primarily technology and media companies to include large and small companies in
the Internet, media, telecommunications, technology, financial services,
consumer products, retail, travel and professional services industries. Many of
Jupiter's clients have limited experience with Internet commerce or operating an
online business. The users of Jupiter's research products and services at client
companies hold diverse positions, demonstrating the importance of Internet
commerce to a company's overall strategy and development. In addition to chief
executive officers and presidents, Jupiter's users include marketing, business
development, operations, strategic planning and information technology
executives.
As of March 31, 2000, Jupiter had 1,158 contracts for its Research
Services. As of March 31, 2000, Jupiter's clients included approximately 19% of
the Fortune 500 companies and approximately 26% of the Media Metrix Top 500 Web
and Digital Media properties. Jupiter expects that its client base will continue
to expand as it introduces new Research Services and increases its sales and
marketing initiatives. Jupiter also believes there is significant opportunity to
increase its penetration of large corporate clients. In addition, Jupiter
expects the number of its international clients to increase significantly as the
use of the Internet grows in other parts of the world and as it introduces
additional products and services targeted to international markets.
To date, none of Jupiter's clients have accounted for more than 2% of the
total annual revenues generated from Research Services.
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<PAGE> 117
SALES AND MARKETING
Jupiter sells and markets its research products and services primarily
through its direct sales force, which was comprised of 107 sales representatives
as of June 30, 2000. This represents an increase from 58 sales representatives
at the end of 1999 and 21 sales representatives at the end of 1998. As with
Jupiter's research analysts, its sales representatives have diverse backgrounds
and experience in a number of different industries. In addition, Jupiter has
been very successful at retaining its sales representatives. During each of the
past two years, Jupiter has retained over 90% of its sales representatives.
Jupiter's sales representatives currently consist of strategic account
managers, who are each responsible for 20 to 30 multinational companies, and
geographic account managers, who are each responsible for specific territories
and assisting the strategic account managers in the territory. Jupiter's
strategic account managers are focused on selling a broad array of products and
services across a global enterprise. Unlike many of Jupiter's direct and
indirect competitors, almost all of Jupiter's sales representatives are located
in the territories that they cover. Jupiter believes that this allows it to
develop stronger relationships with its current and potential clients and to
better understand the changing needs of its clients. Jupiter has implemented a
training program for all of its new sales representatives and believes that this
program has been effective in enabling its sales representatives to quickly and
effectively solicit new clients. Sales representatives receive a base salary and
are eligible for commissions based on new business and renewals.
Jupiter expects to significantly increase the number of its sales
representatives as it grows the business and increases its international
operations. Jupiter also intends to capitalize on its joint venture arrangement
in Japan to significantly expand the sale of Jupiter's research products and
services to Japanese companies, and expects to shortly add six sales
representatives in Japan. In addition to Jupiter's sales representatives,
Jupiter uses independent sales distributors to sell its products and services in
Brazil, Singapore, China, Taiwan, South Korea and Israel. Jupiter is currently
exploring similar distribution arrangements in other countries and may enter
into additional agreements of this nature in the future.
Jupiter has developed a number of strategies and programs to build
awareness of the Jupiter brand and to position the company as the definitive
research resource for Internet commerce. Jupiter employs an active press
relations team, which responds to hundreds of press inquiries on a weekly basis,
and an in-house promotions/advertising staff, which is responsible for
developing sales literature and direct mail campaigns and for managing Jupiter's
advertising efforts. Jupiter's analysts are frequently quoted in articles on the
Internet and e-commerce that appear in major newspapers, magazines and industry
periodicals. In addition, Jupiter actively encourages its research analysts to
speak at non-Jupiter industry and corporate events in order to enhance Jupiter's
reputation and promote Jupiter's diverse products. Jupiter also hosts numerous
breakfast forums around the world which are targeted at potential customers and
designed to enhance Jupiter's visibility and reputation. During 1999, Jupiter
hosted a total of 78 forums which collectively had over 4,800 guests. Jupiter
also devotes significant resources to promoting Jupiter's numerous research
products and services to the thousands of individuals attending its conferences.
Lastly, Jupiter uses its Web site as a tool to market the Jupiter name and
expose potential customers to its products.
RESEARCH ANALYSTS AND METHODOLOGY
Jupiter's research products and services are generated by a growing team of
research professionals, including research analysts, an independent data
research group and a dedicated staff to handle client inquiries. As of June 30,
2000, Jupiter employed a total of 119 research professionals, including 68
analysts. The knowledge and experience of Jupiter's research professionals,
particularly Jupiter's analysts, are the crucial elements in Jupiter's ability
to provide high-quality, timely and original research.
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<PAGE> 118
Jupiter's analysts have extensive industry experience and varied backgrounds.
Jupiter recruits them from a number of different industries, including
management consulting and research firms, financial services, publishing,
entertainment and advertising. Jupiter believes that the diverse backgrounds and
experiences of its analysts allow it to provide original and prescriptive
research and analysis which frequently challenges the conventional wisdom and
viewpoints promoted by others. Jupiter expects to significantly expand the
number of its research analysts as it grows the business and increase the number
of its Research Services.
Jupiter's research methodology enables Jupiter to deliver compelling,
data-driven and timely analysis across all of its Research Services. Jupiter
supports its research professionals with in-house primary research tools and
proprietary databases. Jupiter's dedicated data research group delivers
innovative survey design, sample building and data weighing and processing. This
group provides each of Jupiter's reports with rigorously tested hypotheses that
yield action-oriented analysis. Jupiter's data analysis employs a wide set of
data-gathering tools, including the following:
- Market Forecasting. Jupiter builds complex econometric models to
capture current online activity and forecast user participation, costs
and revenue. These models define key growth levers, market drivers and
market inhibitors, providing clients with a clear analytical framework
for considering upcoming changes in their sectors.
- Primary Consumer Research. In the past, Jupiter conducted its primary
research in alliance with NFO Worldwide. By accessing NFO's household
panel of 575,000 U.S. homes, over 125,000 of which are online, Jupiter
regularly contacts consumer households to assess technology trends. In
the future, Jupiter expects to conduct its primary research in alliance
with The NPD Group, Inc., an affiliate of Media Metrix. In addition,
Jupiter regularly commissions research surveys throughout the world and
is currently conducting research surveys in Europe, Australia, Canada,
Japan and Brazil.
- Customer Valuation Models. Jupiter analysts construct scenario-driven
models for measuring the lifetime value of interactive consumers. These
tools inform Jupiter's analysis and recommendations and assist clients
in identifying the ultimate value in acquiring and retaining visitors
and customers.
- Operational Benchmark Models. Jupiter develops models that determine
the current and future costs, infrastructure needs, visit capacity,
transaction volume and other operational metrics required to manage
expected user demand. These models measure forecasted operational
benchmarks for the industry and individual Web sites to help clients
appropriately invest in building their interactive technology
infrastructure.
- Executive Surveys. Jupiter conducts dozens of formal surveys each year
with top industry executives to explore their strategies, attitudes and
intentions. These surveys evaluate industry trends and changes and
provide Jupiter's analysts with an important measure against which to
test assumptions and hypotheses.
- Web Site Functionality Data. Jupiter's analysts use WebTrack, a
Jupiter-developed database, to measure the performance of various Web
technologies and site features. Based on systematic quarterly research
on nearly 300 consumer Web sites, WebTrack provides an overview of the
distribution of technology services, content and functionality among
these sites.
- Case Studies. Through extensive interviews with industry executives,
analysis of public documents and secondary research, Jupiter compiles
hundreds of case studies each year. These studies identify the
strategic direction, strengths and weaknesses and key partnerships of
all major Internet commerce companies.
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<PAGE> 119
All of Jupiter's research products are subject to a stringent editorial and
review process to ensure that every report is accurate, well-written and useful
to Jupiter's clients. Jupiter maintains consistency among the formats of its
research reports across its Research Services so as to ensure clarity and
readability by all of its clients. Each research topic is first subject to a
series of discussions and meetings to define the scope of the topic, assess the
relevance and importance of the research and highlight key themes and questions.
Prior to publication, each research report is subject to ongoing review and
comment from other analysts and research management.
COMPETITION
Jupiter believes that the primary competitive factors determining success
in its markets include the quality and timeliness of its research and analysis,
its ability to offer products and services that meet the changing needs of its
customers, the prices it charges for its various research products and general
economic conditions. Jupiter believes that it competes favorably with respect to
each of these factors. In addition, Jupiter believes that it distinguishes
itself from its competitors as a result of the depth and breadth of its Research
Services, the extent to which Jupiter provides access to its research analysts,
the quality of its research analysts and sales representatives and the primary
research tools and proprietary databases that it has developed internally.
Jupiter's principal current competitor is Forrester Research. In 1999,
Gartner Group, a large holder of Jupiter common stock, began competing directly
in providing research products related to Internet commerce. A number of other
companies compete with Jupiter in providing research and analysis related to a
specific industry or geographic area. In addition, Jupiter's competitors include
information technology research firms, business consulting and accounting firms,
electronic and print publishing companies and equity analysts employed by
financial services companies.
Jupiter expects competition to increase because of the business
opportunities presented by the growth of Internet commerce around the world.
Competition may also intensify as a result of industry consolidation, because
the markets in which Jupiter operates face few substantial barriers to entry or
because some of Jupiter's competitors may provide additional or complementary
services, such as consulting services. Jupiter's current and potential
competitors include many companies that have substantially greater financial,
information gathering and marketing resources than it has. For example, Gartner
Group and Forrester Research each had higher revenues than Jupiter did during
the first quarter of 2000, and each currently has greater information gathering
and marketing resources than Jupiter has. This may allow them to devote greater
resources than Jupiter can to the promotion of their brand and to the
development and sale of their products and services.
INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
To protect Jupiter's rights to its intellectual property, Jupiter relies on
a combination of trademark and copyright law, trade secret protections and
confidentiality agreements and other contractual arrangements with its employees
and third parties. Jupiter has registered the Jupiter, Jupiter Communications
and Internet Business Report marks in the United States, and Jupiter has pending
trademark applications for certain other trademarks in the United States.
Jupiter also has pending trademark applications for the Jupiter and Jupiter
Communications marks in various foreign jurisdictions. Jupiter provides its
proprietary research products to hundreds of different companies throughout the
world, including some companies that compete with Jupiter in some manner. As a
result, the protective steps Jupiter has taken may be inadequate to protect its
intellectual property and to deter misappropriation of the original research and
analysis that Jupiter develops. Jupiter also may be unable to detect the
unauthorized use of, or take appropriate steps to enforce, its intellectual
property rights. Moreover, effective trademark,
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copyright and trade secret protection may not be available in every country in
which Jupiter offers its research products and services to the extent available
in the United States.
Jupiter's failure to adequately protect its intellectual property, either
in the United States or abroad, could harm the Jupiter brand or its trademarks,
devalue its proprietary research and analysis and affect Jupiter's ability to
compete effectively. Defending its intellectual property rights could result in
the expenditure of significant financial and managerial resources, which could
harm its financial results.
Furthermore, although Jupiter believes that its proprietary rights do not
infringe on the intellectual property rights of others, other parties may assert
claims against Jupiter that Jupiter has misappropriated a trade secret or
infringed a patent, copyright, trademark or other proprietary right belonging to
them. Any infringement or related claims, even if not meritorious, could be
costly and time consuming to litigate, may distract management from other tasks
of operating the business and may result in the loss of significant rights and
the loss of Jupiter's ability to operate its business.
EMPLOYEES
As of June 30, 2000, Jupiter had 425 full-time employees, including 107
sales representatives and 119 research staff, of which 68 were analysts.
Jupiter's compensation policy promotes employee ownership, and Jupiter believes
that this policy contributes to the high retention rates of its research
analysts and sales representatives. Over 90% of Jupiter's employees, including
all of its research analysts and sales representatives, own options to purchase
its securities. In the merger, all of these options will become options to
purchase Media Metrix common stock.
All of Jupiter's research analysts and sales representatives, as well as
all of its executive officers, have entered into agreements that prohibit them
from being employed by a competitive company for a period of at least one year
following their termination of employment with Jupiter. None of its employees
are represented under collective bargaining agreements. Jupiter believes that
its relations with its employees are good.
DESCRIPTION OF PROPERTIES
Jupiter's headquarters are currently located in a leased facility in New
York, New York, consisting of approximately 32,500 square feet of office space.
Jupiter also leases office space in the San Francisco, California area; London,
England; Munich, Germany; Sydney, Australia; Tokyo, Japan; and Stockholm,
Sweden.
Jupiter recently signed a lease for a new 112,000 square foot facility in
New York City where Jupiter plans to consolidate its current offices in New York
City as well as provide for future growth.
LEGAL PROCEEDINGS
Jupiter is not a party to any material legal proceedings.
CORPORATE HISTORY
Jupiter's business was formed on December 1, 1994 with the creation of
Jupiter Communications, LLC, a New York limited liability company. Jupiter
changed its structure from a limited liability company to a corporation at the
closing of Jupiter's initial public offering in October 1999. This change was
made by merging Jupiter Communications, LLC with and into Jupiter
Communications, Inc., a Delaware corporation. Membership units in Jupiter
Communications, LLC were exchanged in the merger for shares of common stock of
Jupiter.
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JUPITER MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth, as of June 30, 2000, the name, age and
position of each of the executive officers and directors of Jupiter:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Gene DeRose..................... 37 Chairman of the Board of Directors and Chief Executive Officer
Kurt Abrahamson................. 39 President, Chief Operating Officer and Director
Jean Robinson................... 44 Chief Financial Officer
Peter Storck.................... 40 Senior Vice President, Research
Ken Male........................ 35 Vice President, Global Sales
Joy Cerequas.................... 35 Vice President, Conferences
Kurt Andersen................... 55 Director
Jeffrey Ballowe................. 44 Director
Robert Kavner................... 57 Director
</TABLE>
INFORMATION CONCERNING EXECUTIVE OFFICERS AND DIRECTORS
The following is information concerning the executive officers and
directors of Jupiter, other than those persons as to whom information is given
in the section "The Merger--Board of Directors and Executive Officers of Jupiter
Media Metrix After the Merger" on page 66.
PETER STORCK has served as Senior Vice President, Research of Jupiter
since November 1998. From June 1998 to November 1998, Mr. Storck served as Vice
President, Research of Jupiter. From July 1996 to June 1998, he served as
Jupiter's Director, Online Advertising Strategies. From July 1995 to July 1996,
Mr. Storck served as a consultant to Jupiter. From January 1989 to July 1995,
Mr. Storck was simultaneously a novelist, a writing instructor at Columbia
University and a compensation specialist at Guy Carpenter & Co., Inc., a
reinsurance intermediary. Prior to that, he served as a political advisor to
various campaigns and officials. Mr. Storck received his B.S. from Cornell
University and an M.F.A. from Columbia University.
KEN MALE has served as Vice President, Global Sales of Jupiter since
January 1998. From December 1995 to January 1998, he served as an Account
Manager for Giga Information Group, Inc., an information technology research
firm, and developed that company's equities research product. From June 1995 to
December 1995, Mr. Male was involved in the formation and launch of Giga
Information Group, Inc. Prior to June 1995, Mr. Male was a private consultant
and held various account manager positions at Gartner Group, Inc., Digital
Equipment Corporation and EMC Corporation. Mr. Male received his B.S. from
Boston College.
JOY CEREQUAS has served as Vice President, Conferences of Jupiter since
August 1998. From May 1994 to August 1998, she served as Group Show Director for
SIGS Publications, Inc., a producer of magazines, books and conferences. Prior
to working at SIGS Publications, Inc., Ms. Cerequas managed conferences and
events for the International Trademark Association and Citicorp Investment Bank.
Ms. Cerequas received B.S. degrees from both the S.I. Newhouse School of Public
Communications and the School of Management of Syracuse University.
KURT ANDERSEN has served as a director of Jupiter since January 2000.
Since September 1999, Mr. Andersen has served as co-chairman of Powerful Media,
Inc., an Internet publishing venture
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<PAGE> 122
covering the entertainment and media industries in the digital age. Mr. Andersen
is the author of the novel "Turn of the Century," published by Random House in
1999. From 1996 to 1999, Mr. Andersen served as a columnist for The New Yorker
magazine. From 1994 to 1996, Mr. Andersen served as editor-in-chief of New York
magazine. During 1993, Mr. Andersen served as editor and columnist for Time
magazine. From 1986 to 1993, Mr. Andersen served as editor of Spy magazine,
which he co-founded. Mr. Andersen received his B.A. from Harvard University.
DIRECTOR COMPENSATION
Jupiter reimburses its directors for customary and reasonable expenses
incurred in connection with the attendance at meetings of its board of
directors. In addition, Jupiter's 1999 Stock Incentive Plan provides that each
individual who joins Jupiter's board of directors as a non-employee board member
automatically receives a grant of an option to purchase 50,000 shares of Jupiter
common stock at the time of his or her commencement of board services. The 1999
Stock Incentive Plan also provides that, on the date of each annual meeting of
stockholders beginning in 2001, each non-employee board member who is to
continue to serve as a non-employee board member will automatically be granted
an option to purchase 5,000 shares of Jupiter common stock. This option will
vest upon each optionee's completion of one year of service as a board member
measured from the option grant.
In addition to the automatic option grant under the 1999 Stock
Incentive Plan, Mr. Ballowe was granted options to acquire an additional 40,000
shares of Jupiter's common stock in connection with his appointment to the Board
in September 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Mr. Andersen and Mr. Ballowe,
neither of whom is or has been an officer or employee of Jupiter. No
interlocking relationships exist between Jupiter's board of directors or
Compensation Committee and the board of directors or compensation committee of
any other company, nor has any such interlocking relationship existed in the
past. No executive officer or director of Jupiter serves on the board of
directors or compensation committee of any entity which has one or more
executive officers serving as a member of Jupiter's board or Compensation
Committee.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the aggregate
compensation paid by Jupiter to Jupiter's Chief Executive Officer and to the
four additional most highly compensated executive officers (the "Named Executive
Officers") for services rendered in all capacities to Jupiter for the years
ended December 31, 1999, 1998 and 1997:
- 113 -
<PAGE> 123
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION(1) COMPENSATION AWARDS
---------------------- SHARES UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#)
--------------------------- ---- ------ ----- -----------
<S> <C> <C> <C> <C>
Gene DeRose.................................... 1999 $182,500 $100,000 50,000
Chief Executive Officer 1998 165,000 50,000 --
1997 149,300 30,000 --
Kurt Abrahamson................................ 1999 $172,500 $100,000 50,000
President and Chief Operating Officer 1998 155,000 50,000 --
1997 138,300 30,000 --
Jean Robinson(2)............................... 1999 $170,000 $ 64,000 85,000
Chief Financial Officer 1998 -- -- --
1997 -- -- --
Peter Storck................................... 1999 $176,000 $100,000 45,000
Senior Vice President, Research 1998 116,750 37,000 13,500
1997 66,500 7,500 41,500
Ken Male(3).................................... 1999 $120,000 $233,000 30,000
Vice President, Global Sales 1998 105,000 96,000 100,000
1997 -- -- --
</TABLE>
----------
(1) The column for "Other Annual Compensation" has been omitted because there
is no compensation required to be reported in that column. The aggregate
amount of perquisites and other personal benefits provided to each
executive officer listed above is less than the lesser of $50,000 and 10%
of his or her total annual salary and bonus.
(2) Jean Robinson joined Jupiter as Chief Financial Officer in March 1999.
(3) Ken Male joined Jupiter as Vice President, Global Sales in January 1998.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning stock option
grants made to each of the Named Executive Officers during the year ended
December 31, 1999. Jupiter did not grant any stock appreciation rights during
the year ended December 31, 1999.
- 114 -
<PAGE> 124
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS(1) TERM(3)
---------------------------------------------------- -----------------------
% OF TOTAL
NUMBER OF OPTIONS
SHARES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE
OPTIONS IN FISCAL PRICE PER EXPIRATION
NAME GRANTED YEAR SHARE(2) DATE 5% 10%
---- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Gene DeRose.......................... 50,000 2.8% $5.90 6/01/06 $120,095 $279,872
Kurt Abrahamson...................... 50,000 2.8% 5.90 6/01/06 120,095 279,872
Jean Robinson........................ 85,000 4.7% 3.00 3/22/06 103,811 241,923
Peter Storck......................... 45,000 2.5% 3.00 5/24/06 54,959 128,077
Ken Male............................. 30,000 1.7% 3.00 1/01/06 36,639 85,385
</TABLE>
----------
(1) Each option represents the right to purchase one share of common stock and
generally vests at a rate of 25% after one year from the date of grant and
6.25% each quarter thereafter.
(2) Options were granted at an exercise price equal to the fair market value of
Jupiter's common stock, as determined by Jupiter's board of directors on
the date of grant.
(3) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. The 5% and
10% assumed annual rates of compounded stock price appreciation are
mandated by rules of the Securities and Exchange Commission and do not
represent Jupiter's estimate or projection of Jupiter's future common stock
prices. These amounts represent certain assumed rates of appreciation in
the value of Jupiter's common stock from the fair market value on the date
of grant. Actual gains, if any, on stock option exercise depend on the
future performance of the common stock. The amounts reflected in the table
may not necessarily be achieved.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table provides information concerning option exercises
during the year ended December 31, 1999 by the Named Executive Officers and the
value of unexercised options held by each of the Named Executive Officers as of
December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF SHARES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1999 DECEMBER 31, 1999
------------------------------- -------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Gene DeRose -- 50,000 -- $1,512,500
Kurt Abrahamson -- 50,000 -- 1,512,500
Jean Robinson -- 85,000 -- 2,571,250
Peter Storck 38,180 61,820 $1,129,526 1,716,099
Ken Male 37,500 92,500 1,115,625 2,676,875
</TABLE>
----------
(1) Value is defined as the fair market price of Jupiter's common stock at
December 31, 1999 less the exercise price. On December 31, 1999, the
closing selling price of a share of Jupiter's common stock on the Nasdaq
National Market was $30.25.
- 115 -
<PAGE> 125
EMPLOYMENT AGREEMENTS
Jupiter is not currently a party to employment agreements with any of
its executive officers. During 1999, Jupiter was a party to employment
agreements with Gene DeRose and Kurt Abrahamson. Each of these employment
agreements expired on December 31, 1999. Prior to the merger, Jupiter will enter
into employment agreements with Messrs. DeRose and Abrahamson and Ms. Jean
Robinson. Please see "Interests of Directors and Executive Officers of Jupiter
in the Merger" on page 62 for more details about these employment agreements.
STOCK PLANS
1997 Option Plan. Jupiter Communications, LLC adopted the 1997 Option Plan
in June 1997. A total of 2,750,000 units were reserved for issuance under this
plan. As of October 6, 1999, options to purchase a total of 2,711,275 units were
outstanding under the 1997 Option Plan. Upon the merger of Jupiter
Communications, LLC with and into Jupiter, the plan and each outstanding option
were assumed by Jupiter and no further options have been, or will be, granted
under this plan.
Each option has a maximum term of seven years. The exercise price of each
option must be paid in cash. In the event of an acquisition of Jupiter, each
option may, at the discretion of Jupiter's board, be accelerated or assumed by
the successor corporation.
1999 Stock Incentive Plan. The 1999 Stock Incentive Plan was adopted by
Jupiter's board of directors and approved by its stockholders on September 17,
1999. The 1999 Stock Incentive Plan is administered by Jupiter's compensation
committee.
5,000,000 shares of Jupiter common stock have been authorized for issuance
under the 1999 Stock Incentive Plan. However, in no event may one participant in
the 1999 Stock Incentive Plan receive option grants or direct stock issuances
for more than 500,000 shares in the aggregate per calendar year.
The 1999 Stock Incentive Plan is divided into five separate programs:
- the discretionary option grant program under which eligible individuals in
the employ of Jupiter may be granted options to purchase shares of Jupiter
common stock at an exercise price determined by the plan administrator;
- the stock issuance program under which eligible individuals may be issued
shares of Jupiter common stock directly, through the purchase of these
shares at a price determined by the plan administrator or as a bonus tied
to the performance of services;
- the salary investment option grant program which may, at the plan
administrator's discretion, be activated for one or more calendar years
and, if so activated, will allow executive officers and other highly
compensated employees the opportunity to use a portion of their base salary
to acquire special below market stock option grants;
- the automatic option grant program under which option grants will
automatically be made at periodic intervals to eligible non-employee board
members to purchase shares of Jupiter common stock at an exercise price
equal to 100% of the fair market value of those shares on the grant date;
and
- the director fee option grant program under which non-employee board
members may be given the opportunity to use a portion of any retainer fee
otherwise payable to them in cash for the year to acquire special below
market stock option grants.
The 1999 Stock Incentive Plan includes the following features:
- 116 -
<PAGE> 126
- The exercise price for any options granted under the plan may be paid in
cash or in shares of Jupiter common stock valued at fair market value on
the exercise date. The option may also be exercised through a same-day sale
program without any cash outlay by the optionee.
- The compensation committee will have the authority to cancel outstanding
options under the discretionary option grant program in return for the
grant of new options for the same or different number of option shares with
an exercise price per share based upon the fair market value of Jupiter
common stock on the new grant date.
- Stock appreciation rights may be issued under the discretionary option
grant program. Such rights will provide the holders with the election to
surrender their outstanding options for an appreciation distribution from
Jupiter equal to the fair market value of the vested shares of Jupiter
common stock subject to the surrendered option less the exercise price
payable for those shares. Jupiter may make the payment in cash or in shares
of Jupiter common stock.
The 1999 Stock Incentive Plan includes change in control provisions that
may result in the accelerated vesting of outstanding option grants and stock
issuances:
- In the event that Jupiter is acquired by merger or asset sale or a
board-approved sale of more than 50% of Jupiter stock by its stockholders,
each outstanding option under the discretionary option grant program that
is not assumed or continued by the successor corporation will immediately
become exercisable for all the option shares, and all unvested shares will
immediately vest, except to the extent our repurchase rights with respect
to those shares are to be assigned to the successor corporation.
- The plan administrator may grant options which vest immediately upon an
acquisition of Jupiter or upon a hostile change of control or upon the
individual's termination of service following an acquisition that results
in a change in control.
- Jupiter's board is able to amend or modify the 1999 Stock Incentive Plan at
any time, subject to any required stockholder approval. The 1999 Stock
Incentive Plan will terminate no later than September 16, 2009.
1999 Employee Stock Purchase Plan. The 1999 Employee Stock Purchase Plan
was adopted by Jupiter's board of directors and approved by its stockholders on
September 17, 1999. The plan became effective immediately upon the execution of
the underwriting agreement for Jupiter's initial public offering. The plan is
designed to allow eligible employees of Jupiter and its participating
subsidiaries to purchase shares of Jupiter common stock, at semi-annual
intervals, through their periodic payroll deductions. A total of 500,000 shares
of common stock may be issued under the plan.
The plan has a series of successive offering periods, each with a maximum
duration of 24 months. However, the initial offering period began on the day the
underwriting agreement was executed in connection with Jupiter's initial public
offering and will end on the last business day in October 2001. The next
offering period will begin on the first business day in November 2001, and
subsequent offering periods will be set by Jupiter's compensation committee.
A participant may contribute up to 15% of his or her cash earnings through
payroll deductions and the accumulated payroll deductions will be applied to the
purchase of shares on the participant's behalf on each semi-annual purchase date
(the last business day in April and October of each year). The purchase price
per share will be 85% of the lower of the fair market value of Jupiter's common
stock on the participant's entry date into the offering period or the fair
market value on the semi-annual purchase date. The first purchase date occurred
on the last business day in April 2000. In no event, however, may any
participant purchase more than 850 shares, nor may all participants in the
aggregate purchase more than 125,000 shares on any one semi-annual purchase
date. Should the fair market value of the common stock
- 117 -
<PAGE> 127
on any semi-annual purchase date be less than the fair market value on the first
day of the offering period, then the current offering period will automatically
end and a new offering period will begin, based on the lower fair market value.
Jupiter's board is able to amend or modify the plan at any time. The plan
will terminate no later than the last business day in October 2009.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Robert Kavner, one of Jupiter's directors, is also a director of Fleet
Financial Group, Inc. Two affiliates of Fleet Financial Group, Inc. have
research services contracts with Jupiter.
- 118 -
<PAGE> 128
PRINCIPAL STOCKHOLDERS OF JUPITER
The following table sets forth information with respect to beneficial
ownership of Jupiter's common stock as of June 22, 2000, by:
- each person known by Jupiter to beneficially own more than 5% of its common
stock;
- Jupiter's named executive officers;
- each of Jupiter's directors; and
- all of Jupiter's executive officers and directors as a group.
Beneficial ownership is determined in accordance with the rules of the SEC
and includes voting or investment power with respect to the securities. Unless
otherwise indicated, the address for those listed below is c/o Jupiter
Communications, Inc., 627 Broadway, New York, New York 10012. Except as
indicated by footnote, and subject to applicable community property laws, the
persons named in the table have sole voting and investment power with respect to
all shares of common stock shown as beneficially owned by them. The number of
shares of common stock outstanding used in calculating the percentage for each
listed person includes the shares of common stock underlying options held by
such persons that are exercisable within 60 days of June 22, 2000, but excludes
shares of common stock underlying options held by any other person. Percentage
of beneficial ownership is based on 15,549,572 shares of common stock
outstanding as of June 22, 2000.
<TABLE>
<CAPTION>
Shares Beneficially Owned
---------------------------
Name of Beneficial Owner Number Percent
------------------------ ------ -------
<S> <C> <C>
Gartner Group, Inc.(1) ....................................... 2,714,553 17.5%
Gene DeRose(2) ............................................... 2,349,103 15.1%
Kurt Abrahamson(2) ........................................... 1,061,883 6.8%
Robert Kavner(3) ............................................. 202,085 1.3%
Ken Male(4) .................................................. 68,500 *
Peter Storck(5) .............................................. 65,254 *
Jean Robinson(6) ............................................. 33,524 *
Jeffrey Ballowe(7) ........................................... 27,500 *
Kurt Andersen(7) ............................................. 7,290 *
All directors and executive officers as a group (9 persons)(8) 3,828,707 24.2%
</TABLE>
------------------
* Indicates less than one percent
(1) The address of Gartner Group, Inc. is 56 Top Gallant Road,
P.O. Box 10212, Stamford, CT 06904.
(2) Includes 15,625 shares issuable upon the exercise of options.
(3) Includes 2,085 shares issuable upon the exercise of options.
(4) Includes 67,500 shares issuable upon the exercise of options.
(5) Includes 64,404 shares issuable upon the exercise of options.
(6) Includes 31,874 shares issuable upon the exercise of options.
(7) All of these shares are issuable upon the exercise of options.
(8) Includes 244,715 shares issuable upon the exercise of options.
- 119 -
<PAGE> 129
SELECTED CONSOLIDATED FINANCIAL DATA OF JUPITER
The selected consolidated balance sheet data as of December 31,
1998 and 1999 and the selected consolidated statement of operations data for the
years ended December 31, 1997, 1998 and 1999 have been derived from Jupiter's
audited consolidated financial statements included at page F-1 in this joint
proxy statement/prospectus. The selected balance sheet data as of December 31,
1995, 1996 and 1997, and the statement of operations data for 1995 and 1996,
have been derived from Jupiter's audited financial statements not included in
this joint proxy statement/prospectus. The consolidated balance sheet data as of
March 31, 2000 and the consolidated statement of operations data for the three
months ended March 31, 1999 and 2000 have been derived from Jupiter's unaudited
consolidated financial statements and in the opinion of management include all
adjustments, which are normal, recurring adjustments, necessary for a fair
presentation of the results of operations and the financial position for the
unaudited periods. This selected consolidated financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations of Jupiter" at page 3 and Jupiter's consolidated
financial statements and the notes to those statements at page F-1 of this joint
proxy statement/prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------------------ ---------------
1995 1996 1997 1998 1999 1999 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues:
Research Services ...................... $ 237 $ 566 $ 1,850 $ 6,183 $ 23,134 $ 3,447 $ 11,233
Conferences ............................ 2,024 2,686 3,426 4,890 11,270 1,724 5,118
Other .................................. 1,439 3,000 3,229 3,675 3,680 845 809
-------- -------- -------- -------- -------- -------- --------
Total revenues .................... 3,700 6,252 8,505 14,748 38,084 6,016 17,160
Cost of services and fulfillment ............. 2,893 4,687 6,259 9,676 16,898 2,955 6,665
-------- -------- -------- -------- -------- -------- --------
Gross profit ...................... 807 1,565 2,246 5,072 21,186 3,061 10,495
Other operating expenses:
Sales and marketing .................... 254 514 1,558 3,173 11,384 1,750 5,209
General and administrative ............. 990 1,589 2,855 3,897 10,099 1,511 5,179
Depreciation and amortization .......... 35 75 100 193 1,278 124 881
-------- -------- -------- -------- -------- -------- --------
Total other operating expenses .... 1,279 2,178 4,513 7,263 22,761 3,385 11,269
-------- -------- -------- -------- -------- -------- --------
Interest income .............................. -- -- 17 54 743 3 909
Gain on sale of investments .................. -- -- -- -- -- -- 5,894
-------- -------- -------- -------- -------- -------- --------
Income (Loss) before income taxes ............ (472) (613) (2,250) (2,137) (832) (321) 6,029
Income tax benefit (expense) ................. -- -- -- -- 202 -- (2,835)
-------- -------- -------- -------- -------- -------- --------
Net income (loss) ............................ $ (472) $ (613) $ (2,250) $ (2,137) $ (630) $ (321) $ 3,194
======== ======== ======== ======== ======== ======== ========
Pro forma basic net income (loss) per common
share (1) .................................. $ (0.21) $ (0.05) $ (0.03) $ .22
======== ======== ======== ========
Pro forma diluted net income (loss) per common
share (1) .................................. $ (0.21) $ (0.05) $ (0.03) $ .20
======== ======== ======== ========
Pro forma weighted average common
shares outstanding (1) ..................... 10,318 11,565 10,318 14,603
Pro forma diluted weighted average common
shares outstanding ......................... 10,318 11,565 10,318 15,901
</TABLE>
- 120 -
<PAGE> 130
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
----------------------------------------------- -----------------
1995 1996 1997 1998 1999 1999 2000
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED CONSOLIDATED OPERATING DATA:
Number of Research Services contracts ........................ 13 66 145 421 987 514 1,158
Total contract value (in thousands) .......................... $ 315 $ 923 $ 2,509 $11,666 $40,081 $15,200 $50,500
Research Services deferred revenue (in thousands)............. $ 78 $ 313 $ 614 $ 5,639 $21,908 $ 6,600 $26,700
Number of employees .......................................... 18 61 88 142 270 167 354
Number of conferences ........................................ 6 7 8 9 10 1 4
</TABLE>
------------------
(1) Pro forma basic and diluted net loss per common share is computed by
dividing net loss by the pro forma weighted average number of shares of
common stock. Pro forma weighted average number of shares of common stock
gives effect to Jupiter's reorganization from an LLC to a corporation as
though the reorganization had occurred as of January 1, 1998. Pro forma
weighted average shares do not include any common stock equivalents for any
periods, except for the three months ended March 31, 2000, because
inclusion of common stock equivalents would have been anti-dilutive.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------------------------- --------
1995 1996 1997 1998 1999 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents ................... $ 4 $ 8 $ 1,614 $ 216 $ 57,222 $ 48,930
Working capital ............................. (572) (1,166) (553) (3,376) 55,029 50,822
Total assets ................................ 907 1,474 3,463 6,867 97,180 129,292
Convertible notes payable ................... -- -- -- -- 3,500 --
Stockholders' equity/members deficiency ..... (405) (714) 9 (2,129) 61,498 83,879
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OF JUPITER
You should read the following discussion and analysis in conjunction
with Jupiter's financial statements and related notes included in this joint
proxy statement/prospectus. This discussion contains forward-looking statements
that involve risks and uncertainties. Please see "Risks Relating to Jupiter" on
page 31 for more information as to these risks and uncertainties.
OVERVIEW
Jupiter provides research and advice on Internet commerce. Senior
executives at Jupiter's client companies utilize Jupiter's research to make
informed business decisions in a complex and rapidly changing Internet economy.
Jupiter's research, which is focused solely on the global Internet economy,
provides Jupiter's clients with comprehensive views of industry trends,
forecasts and best practices. Jupiter's analysis, supported by proprietary data,
emphasizes specific, actionable findings.
Jupiter's revenues consist of Research Services, conferences and other
revenues. For the three months ended March 31, 2000, Research Services
represented approximately 65.5% of Jupiter's total revenues. Jupiter Research
Services is a combination of proprietary written analysis, supporting data and
access to Jupiter's analysts. Jupiter typically bills clients annually in
advance and delivers the products and services over the term of the contract.
Jupiter also produces a wide range of conferences which offer senior executives
the opportunity to hear first-hand the insights of Jupiter's analysts and the
leading decision makers in the Internet and technology industries. Conference
revenues consist of revenues from individual attendees, sponsors, which display
their logo in Jupiter's conference program and/or host a reception, and
exhibitors, which receive a booth to promote their companies. For the three
months ended March 31, 2000, conferences represented approximately 29.8% of
Jupiter's total revenues. Other revenues, which consist primarily of book-length
studies, newsletters and custom research, represented approximately 4.7% of
Jupiter's total revenues for the three months ended March 31, 2000.
- 121 -
<PAGE> 131
Research Services contracts are renewable contracts, typically renewed
annually, and payable in advance. Accordingly, a substantial portion of
Jupiter's billings is initially recorded as deferred revenue and amortized into
revenue over the term of the contract. Commission expense related to Research
Services is also initially deferred and amortized into expense over the contract
period in which the related revenues are earned and amortized to income.
Jupiter's contracts are non-cancelable and non-refundable. Billings attributable
to Jupiter's conferences and other products and services are initially recorded
as deferred revenue and recognized upon the completion of the event or project.
Jupiter has experienced rapid growth since its organization, and
particularly since its decision in late 1996 to focus its business on Research
Services, formerly known as Strategic Planning Services or SPS. Between 1995 and
1999, Jupiter's total revenues grew from $3.7 million to $38.1 million, a
compound annual growth rate of 79.1%. For the three months ended March 31, 2000,
Jupiter's revenues of $17.2 million represented an increase of 185.2% over
revenues of $6.0 million for the three months ended March 31, 1999. The number
of Research Services contracts has increased from 514 as of March 31, 1999 to
1,158 as of March 31, 2000. Jupiter's total contract value has increased from
$15.2 million on March 31, 1999 to $50.5 million on March 31, 2000. Jupiter
believes that total contract value is a meaningful measure of the volume of its
business. Total contract value represents the annualized value of all
outstanding Research Services contracts without regard to the remaining duration
of such contracts. Total contract value, however, does not necessarily correlate
to deferred revenue. Deferred revenue represents unamortized revenue remaining
on all outstanding and billed contracts. As of March 31, 2000, deferred revenue
related to Research Services contracts totaled $26.7 million, which was 52.9% of
Jupiter's total contract value as of such date.
To date, a substantial portion of expiring Research Services contracts
has been renewed for an equal or higher amount. Approximately 75% of contracts
expiring during the twelve months ended March 31, 2000 were renewed and
approximately 95% of these contracts were renewed for an equal or larger dollar
amount. With this high customer renewal rate, Jupiter believes it has a growing
base of recurring revenues from its Research Services.
Jupiter has a highly diversified client base, including companies in the
Internet, media, telecommunications, technology, financial services, retail,
travel, consumer products and professional services industries. No client
accounts for more than 2% of Jupiter's total annual revenues.
Cost of services and fulfillment represents the costs associated with
production and delivery of Jupiter's products and services, including the costs
of salaries, bonuses and related benefits for Jupiter's research and conference
personnel, all associated editorial, travel and support services, and the costs
of producing Jupiter's conferences. Sales and marketing expenses include
salaries, bonuses, employee benefits, travel expenses, promotional costs, sales
commissions and other costs incurred in marketing and selling Jupiter's products
and services. General and administrative expenses include the costs of Jupiter's
finance and technology groups and other administrative functions.
Jupiter has recorded deferred compensation of approximately $577,000,
representing the difference between the exercise price of unit options granted
in July 1999 and the fair value for accounting purposes of the underlying units
at the date of grant, assuming a fair value of Jupiter's units on the date of
grant of $11.00 per share. The $577,000 deferred compensation cost is being
amortized over the vesting period of the options.
Jupiter has incurred net losses each year since its formation. Its net
loss was $613,000 in 1996, $2.3 million in 1997, $2.1 million in 1998 and
$630,000 in 1999. Jupiter had a net profit of $3.2 million in the first quarter
of 2000 and, as of March 31, 2000, had retained earnings of $1.9 million. The
net profit in the first quarter was due primarily to a $3.1 million after tax
gain on the sale of Jupiter's shares of Methodfive LLC in exchange for shares of
Xceed, Inc. Jupiter expects to incur significant expenditures
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<PAGE> 132
in the future associated with its domestic and international expansion
strategies. In particular, Jupiter intends to continue to expand its research
and sales personnel, and it intends to continue to invest in technology,
leasehold improvements and the development of additional research practices and
modules.
RESULTS OF OPERATIONS
The following table sets forth Jupiter's results of operations expressed
as a percentage of total revenues:
<TABLE>
<CAPTION>
Year Ended December 31, Three Months Ended March 31,
1997 1998 1999 1999 2000
----- ----- ---- ---- ----
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Research Services ................. 21.7% 41.9% 60.7% 57.3% 65.5%
Conferences ....................... 40.3 33.2 29.6 28.7 29.8
Other ............................. 38.0 24.9 9.7 14.0 4.7
----- ----- ---- ---- ----
Total revenues ............... 100.0 100.0 100.0 100.0 100.0
Cost of services and fulfillment ........... 73.6 65.6 44.4 49.1 38.8
----- ----- ---- ---- ----
Gross profit ...................... 26.4 34.4 55.6 50.9 61.2
Other operating expenses:
Sales and marketing ............... 18.3 21.5 29.9 29.1 30.4
General and administrative ........ 33.6 26.4 26.5 25.1 30.2
Depreciation and amortization ..... 1.2 1.3 3.4 2.1 5.1
----- ----- ---- ---- ----
Total other operating expenses 53.1 49.2 59.8 56.3 65.7
----- ----- ---- ---- ----
Interest income ............................ 0.2 0.3 2.0 -- 5.3
Gain on sale of investments................. -- -- -- -- 34.3
----- ----- ---- ---- ----
Loss before income taxes ................... (26.5) (14.5) (2.2) (5.3) 35.1
Income tax benefit (expense) ............... -- -- 0.5 -- (16.5)
----- ----- ---- ---- ----
Net income (loss) .......................... (26.5)% (14.5)% (1.7)% (5.3)% 18.6%
===== ===== ==== ==== ====
</TABLE>
COMPARISON OF THREE MONTHS ENDED MARCH 31, 2000 AND 1999
Revenues. Total revenues increased 185.2% to $17.2 million in the three
months ended March 31, 2000, from $6.0 million in the three months ended March
31, 1999. Research Services revenues increased 225.8% to $11.2 million in the
three months ended March 31, 2000 from $3.4 million in the three months ended
March 31, 1999. The increases are attributable primarily to an increase in the
number of Research Services contracts to 1,158 at March 31, 2000 from 514 at
March 31, 1999 and an increase in average contract value to $43,600 at March 31,
2000 from $29,500 at March 31, 1999. These increases reflect an increase in the
number of users at, and research services purchased by, Jupiter's client
companies. Total contract value increased to $50.5 million at March 31, 2000
from $15.2 million at March 31, 1999. The Research Services deferred revenue
related to the contract value at March 31, 2000 and March 31, 1999 was $26.7
million and $6.6 million, respectively.
Conference revenues increased 196.8% to $5.1 million in the three months
ended March 31, 2000 from $1.7 million in the three months ended March 31, 1999.
These revenues reflect the results of four conferences in the three months ended
March 31, 2000 and one conference in the three months ended March 31, 1999. The
increases are attributable to an increase in attendee, sponsor and exhibitor
revenues and the production of three additional conferences in the three months
ended March 31, 2000.
Other revenues decreased 4.3% to $809,000 in the three months ended
March 31, 2000 from $845,000 in the three months ended March 31, 1999. These
decreases reflect Jupiter's decision to focus Jupiter's business on Research
Services and to discontinue the sale of newsletters.
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<PAGE> 133
Cost of Services and Fulfillment. Cost of services and fulfillment
increased 125.5% to $6.7 million in the three months ended March 31, 2000 from
$3.0 million in the three months ended March 31, 1999. The increases are
attributable to the overall growth of Jupiter's business, in particular the
increased research staffing for new and existing research practices. Gross
margin increased to 61.2% in the three months ended March 31, 2000 from 50.9% in
the three months ended March 31, 1999 because the growth in Jupiter's client
base and new business exceeded the growth in the cost of providing its research
services and conferences.
Sales and Marketing. Sales and marketing expenses increased 197.7% to
$5.2 million in the three months ended March 31, 2000 from $1.8 million in the
three months ended March 31, 1999. As a percentage of total revenues, these
expenses increased to 30.3% in the three months ended March 31, 2000 from 29.1%
in the three months ended March 31, 1999. The increases are primarily
attributable to an increased number of sales personnel and the corresponding
commission costs associated with increased revenues, as well as increased
promotional costs for Jupiter Research Services products.
General and Administrative. General and administrative expenses
increased 242.8% to $5.2 million in the three months ended March 31, 2000 from
$1.5 million in the three months ended March 31, 1999. The increases were
primarily attributable to increased personnel for the finance, human resources
and operations areas, increased operating costs relating to Jupiter's internal
technology systems, higher costs for recruiting, retaining and training its
staff, and higher costs for staff travel and professional fees. As a percentage
of total revenues, these expenses increased to 30.2% in the three months ended
March 31, 2000 from 25.1% in the three months ended March 31, 1999. This
increase reflects the fact that some of these expenses, such as personnel costs,
increased at a higher rate than Jupiter's revenues.
Depreciation and Amortization. Depreciation and amortization expense
increased 608% to $881,000 in the three months ended March 31, 2000 from
$124,000 in the three months ended March 31, 1999. As a percentage of total
revenues, these expenses increased to 5.1% in the three months ended March 31,
2000 from 2.1% in the three months ended March 31, 1999. The increases are
primarily attributable to the acquisition of 45% of the Plug-In conference from
Jupiter's partners, increased investment in capital assets, such as leasehold
improvements and IT infrastructure, as well as amortization of goodwill related
to acquisitions in Sweden and Australia, as well as the Internet Research Group
acquisition.
Interest income. Interest income increased to $909,000 in the three
months ended March 31, 2000 from $3,000 in the three months ended March 31,
1999. This increase was caused by the investment of the net proceeds from
Jupiter's initial public offering, all of which were invested in short-term,
highly liquid investment-grade securities.
Income tax expense. Income tax expense increased to $2.8 million for the
three months ended March 31, 2000 from $0 in the three months ended March 31,
1999. This increase was due primarily to a gain on the sale of Jupiter's shares
in Methodfive LLC in exchange for shares of Xceed, Inc.
COMPARISON OF THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
Revenues. Total revenues increased 158.2% to $38.1 million in 1999 from
$14.7 million in 1998 and 73.4% to $14.7 million in 1998 from $8.5 million in
1997. Jupiter Research Services revenues increased by 274.1% to $23.1 million in
1999 from $6.2 million in 1998. This increase is attributable primarily to an
increase in the number of Research Services contracts to 987 at December 31,
1999 from 421 at December 31, 1998 and an increase in average contract value to
$40,600 at December 31, 1999 from $27,700 at December 31, 1998. Research
Services revenues increased by 234.2% to $6.2 million in 1998 from $1.9 million
in 1997. This increase is attributable primarily to an increase in the number of
Research Services contracts to 421 at December 31, 1998 from 145 at December 31,
1997 and an increase in average contract value to $27,700 at December 31, 1998
from $17,300 at December 31, 1997.
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<PAGE> 134
The increase in Research Services revenues in these periods reflects an
increase in the number of users at, and Research Services offered to and
purchased by, Jupiter's client companies. Total contract value increased to
$40.1 million at December 31, 1999 from $11.7 million at December 31, 1998 and
$2.5 million at December 31, 1997. The Research Services deferred revenue
related to the contract value at December 31, 1999, December 31, 1998 and
December 31, 1997 was $21.9 million, $5.6 million and $614,000, respectively.
Conference revenues increased 130.5% to $11.3 million in 1999 from $4.9
million in 1998 and 42.7% to $4.9 million in 1998 from $3.4 million in 1997.
These revenues reflect the results of ten conferences in 1999, nine in 1998 and
eight in 1997. These increases are attributable to increases in average
attendee, sponsor and exhibitor revenues, as well as the production of one
additional conference in each year.
Other revenues were unchanged at $3.7 million in 1999 and 1998. This
reflects an increase in revenues from custom research and other miscellaneous
revenue sources, offset by a decrease in newsletter revenues, which reflect the
fact that Jupiter ceased publication of its Internet Business Report newsletter.
Other revenues increased 13.8% to $3.7 million in 1998 from $3.2 million in
1997. This increase reflects an increase in revenues from custom research and
book-length studies, offset in part by a small decrease in newsletter revenues.
Cost of Services and Fulfillment. Cost of services and fulfillment
increased 74.6% to $16.9 million in 1999 from $9.7 million in 1998. The increase
in this period was attributable to the overall growth of Jupiter's business, in
particular the increased research staffing for new and existing Research
Services. These expenses increased 54.6% to $9.7 million in 1998 from $6.3
million in 1997. The increase in this period was attributable to increased costs
for producing conferences and other direct products, and for increases in
research staffing. Gross margin increased to 55.6% in 1999 from 34.4% in 1998
and increased to 34.4% in 1998 from 26.4% in 1997 because the growth in
Jupiter's client base and new business exceeded the growth in the cost of
providing Jupiter's research services and conferences.
Sales and Marketing. Sales and marketing expenses increased 258.8% to
$11.4 million in 1999 from $3.2 million in 1998. The increase in this period was
primarily attributable to an increased number of sales personnel and the
corresponding commission costs associated with increased revenues, as well as
increased promotional costs for Jupiter Research Services products. Sales and
marketing expenses increased 103.7% to $3.2 million in 1998 from $1.6 million in
1997. The expense increase in this period was primarily attributable to
increased personnel in the marketing area to support an increased direct mail
effort. As a percentage of total revenues, these expenses increased to 29.9% in
1999 from 21.5% in 1998 and increased to 21.5% in 1998 from 18.3% in 1997.
General and Administrative. General and administrative expenses
increased 159.2% to $10.1 million in 1999 from $3.9 million in 1998. This
increase was primarily attributable to significantly increased personnel in the
information technology, finance, human resource and operations areas, as well as
increased costs associated with basic office operations, including rent and
telecommunications, higher costs for professional fees and increased travel
costs. General and administrative expenses increased 36.5% to $3.9 million in
1998 from $2.9 million in 1997. The expense increase in this period was
primarily attributable to increased staffing for the finance, human resources
and operations areas. As a percentage of total revenues, these expenses
increased to 26.5% in 1999 from 26.4% in 1998 due to revenues increasing at a
slightly slower rate and decreased to 26.4% in 1998 from 33.6% in 1997 due to
revenues increasing at a greater rate.
Depreciation and Amortization. Depreciation and amortization expense
increased 562.2% to $1.3 million in 1999 from $193,000 in 1998. This increase
was primarily caused by increased investment in capital assets, such as
leasehold improvements and IT infrastructure, as well as by amortization of
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<PAGE> 135
goodwill related to acquisitions in Sweden and Australia, the acquisition of 45%
of the Plug-In conference from Jupiter's conference partners and deferred
compensation costs. Depreciation and amortization expense increased 93.0% to
$193,000 in 1998 from $100,000 in 1997 due to higher spending on leasehold
improvements and IT infrastructure.
Interest Income. Interest income increased to $743,000 in 1999 from
$54,000 in 1998. This increase was caused by the investment of the net proceeds
from Jupiter's initial public offering, all of which were invested in
short-term, highly liquid investment-grade securities. Interest income increased
217.6% to $54,000 in 1998 from $17,000 in 1997 due to higher average cash
balances maintained by Jupiter in various bank accounts.
INCOME TAXES
No provision or benefit for federal or state income taxes has been
recorded for the net operating losses Jupiter incurred in the years ended
December 31, 1997 and 1998. In addition, no net operating losses incurred in
1999 prior to the closing of Jupiter's initial public offering will be recorded
on Jupiter's federal or state tax returns because Jupiter was a limited
liability company for tax purposes during these periods and all taxable losses
were allocated to the members for reporting on their income tax returns. For the
period subsequent to Jupiter's initial public offering, Jupiter has recorded a
tax benefit of $202,000, after reflecting a valuation allowance to reduce the
deferred tax assets due to its history of operating losses and the uncertainty
regarding whether the deferred tax benefit will be realized.
UNAUDITED QUARTERLY RESULTS OF OPERATIONS DATA
The following tables set forth unaudited quarterly statement of
operations data for each of the eight quarters in the two year period ended
March 31, 2000 and such data expressed as a percentage of total revenues.
Jupiter believes that it has prepared these data on the same basis as its
audited financial statements contained in this joint proxy statement/prospectus
beginning on page F-1, and has included all necessary adjustments, consisting
only of normal recurring adjustments, necessary for a fair presentation of
Jupiter's results of operations for these interim periods. You should read these
interim financial data together with Jupiter's audited financial statements and
the notes to those statements contained in this joint proxy statement/prospectus
beginning on page F-1. Jupiter's historical results of operations do not
necessarily indicate the results of operations Jupiter will achieve in the
future, and Jupiter's results of operations for interim periods do not
necessarily indicate the results of operations for any future period. Jupiter's
results of operations may fluctuate significantly in the future as a result of a
variety of factors, many of which are beyond Jupiter's control. Please see
"Risks Relating to Jupiter -- Jupiter's operating results may fluctuate in
future periods."
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<PAGE> 136
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------------------------------------------------------------
Jun 30, Sep 30, Dec 31, Mar 31, Jun 30, Sep 30, Dec 31, Mar 31,
1998 1998 1998 1999 1999 1999 1999 2000
-------- -------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Research Services ............. $ 1,233 $ 1,757 $ 2,431 $ 3,447 $ 4,719 $ 6,385 $ 8,583 $ 11,233
Conferences ................... 1,091 2,354 557 1,724 2,829 5,340 1,377 5,118
Other ......................... 978 1,012 730 845 827 921 1,088 809
-------- -------- -------- -------- -------- -------- -------- --------
Total revenues ...................... 3,302 5,123 3,718 6,016 8,375 12,646 11,048 17,160
Cost of services and fulfillment .... 2,191 3,127 2,267 2,955 3,899 5,520 4,524 6,664
-------- -------- -------- -------- -------- -------- -------- --------
Gross profit ........................ 1,111 1,996 1,451 3,061 4,476 7,126 6,524 10,496
Other operating expenses:
Sales and marketing ........... 702 842 1,018 1,750 2,258 3,134 4,242 5,209
General and administrative .... 958 1,084 992 1,511 1,840 2,963 3,788 5,180
Depreciation and administration 49 48 48 124 193 266 695 881
-------- -------- -------- -------- -------- -------- -------- --------
Total other operating expenses ...... 1,709 1,974 2,058 3,385 4,291 6,363 8,725 11,270
-------- -------- -------- -------- -------- -------- -------- --------
Interest income ..................... 2 2 46 3 6 26 708 909
Gain on Sale of Investments.......... -- -- -- -- -- -- -- 5,895
-------- -------- -------- -------- -------- -------- -------- --------
Income (loss) before income taxes ... (596) 24 (561) (321) 191 789 (1,493) 6,029
Income tax benefit (expense) ........ -- -- -- -- -- -- 202 (2,835)
-------- -------- -------- -------- -------- -------- -------- --------
Net income (loss) ................... $ (596) $ 24 $ (561) $ (321) $ 191 $ 789 $ (1,291) $ 3,194
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended
---------------------------------------------------------------------------------------------
Jun 30, Sep 30, Dec 31, Mar 31, Jun 30, Sep 30, Dec 31, Mar 31,
1998 1998 1998 1999 1999 1999 1999 2000
----- --- ----- ---- --- --- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Research Services ........... 37.3% 34.3% 65.4% 57.3% 56.3% 50.5% 77.7% 65.5%
Conferences ................. 33.0 45.9 15.0 28.7 33.8 42.2 12.5 29.8
Other ....................... 29.6 19.8 19.6 14.0 9.9 7.3 9.8 4.7
----- --- ----- ---- --- --- ----- ----
Total revenues .................... 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Cost of services and fulfillment .. 66.4 61.0 61.0 49.1 46.6 43.7 40.9 38.8
----- --- ----- ---- --- --- ----- ----
Gross profit ...................... 33.6 39.0 39.0 50.9 53.4 56.3 59.1 61.2
Other operating expenses:
Sales and marketing ......... 21.3 16.4 27.4 29.1 27.0 24.8 38.4 30.4
General and administrative .. 29.0 21.2 26.7 25.1 22.0 23.4 34.3 30.2
Depreciation and amortization 1.5 0.9 1.3 2.1 2.3 2.1 6.3 5.1
----- --- ----- ---- --- --- ----- ----
Total other operating expenses .... 51.8 38.5 55.4 56.3 51.2 50.3 79.0 65.7
----- --- ----- ---- --- --- ----- ----
Interest income ................... 0.1 -- 1.2 -- 0.1 0.2 6.4 5.3
Gain on Sale of Investments........ -- -- -- -- -- -- -- 34.3
----- --- ----- ---- --- --- ----- ----
Income (loss) before income taxes . (18.0) 0.5 (15.1) (5.3) 2.3 6.2 (13.5) 35.1
Income tax benefit (expense) ...... -- -- -- -- -- -- 1.8 (16.5)
----- --- ----- ---- --- --- ----- ----
Net income (loss) ................. (18.0)% 0.5% (15.1)% (5.3)% 2.3% 6.2% (11.7)% 18.6%
===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES, QUARTERS ENDED MARCH 31, 2000 AND 1999
Since inception, Jupiter has financed its operations primarily through
private placements of equity securities and the sale of common stock in its
initial public offering. Net cash provided by operating activities increased to
$5.8 million for the three months ended March 31, 2000 from $1.1 million for the
three months ended March 31, 1999, due principally to an increased level of
business activity.
Net cash used in investing activities increased to $12.0 million for the
three months ended March 31, 2000 from $446,000 for the three months ended March
31, 1999 due principally to investments made in investment-grade securities. In
addition, Jupiter increased capital expenditures for leasehold improvements,
other computer hardware and capitalizable software.
Net cash used in financing activities increased to $2.1 million for the
three months ended March 31, 2000 versus net cash used in financing activities
of $0 for the three months ended March 31, 1999. The increase was due to the
early repayment of one promissory note in its entirety and early repayment of a
portion of a second promissory note.
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<PAGE> 137
As of March 31, 2000, Jupiter had $48.9 million in cash and cash
equivalents, and $18.6 million invested in highly liquid investment-grade
securities. Jupiter has a $7.0 million committed line of credit, secured by
substantially all of its assets, under which there were no outstanding balances
as of March 31, 2000. As of March 31, 2000 none of the $62.4 million in net
proceeds from Jupiter's initial public offering had been utilized.
Jupiter expects to spend approximately $14.0 million in 2000 on
technology, including computer system enhancements, leasehold improvements,
expansion of operations and telecommunications upgrades. Jupiter anticipates
that will continue to increase its capital expenditures and lease commitments
consistent with its anticipated growth in operations, infrastructure and
personnel. In addition, Jupiter anticipates that it will continue to evaluate
investments in other businesses, and continue to expand its sales and marketing
programs and conduct more aggressive brand promotions, any of which could reduce
its liquidity. Jupiter also anticipates that it will continue to experience
growth in its operating expenses to support its revenue growth, including the
introduction of new Research Services.
LIQUIDITY AND CAPITAL RESOURCES, YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
Since inception, Jupiter has financed its operations primarily through
private placements of equity securities and the sale of common stock in its
initial public offering. Net cash provided by operating activities increased to
$7.6 million for the year ended December 31, 1999 versus net cash used in
operating activities of $557,000 for the year ended December 31, 1998, due
principally to an increased level of business activity.
Net cash used in investing activities increased to $13.6 million for the
year ended December 31, 1999 from $838,000 for the year ended December 31, 1998
due to investments made in investment-grade securities. In addition, Jupiter
increased capital expenditures for leasehold improvements, other computer
hardware and capitalizable software.
Net cash provided by financing activities increased to $63.0 million for
the year ended December 31, 1999 versus net cash used in financing activities of
$3,000 for the year ended December 31, 1998. The increase was due to the
successful completion of Jupiter's initial public offering, which resulted in
net proceeds to Jupiter of $62.4 million, as well as to proceeds received from
the exercise of unit options.
As of December 31, 1999, Jupiter had $57.2 million in cash and cash
equivalents and $8.9 million invested in highly liquid investment-grade
securities. Jupiter has a $3.0 million committed line of credit, secured by
substantially all of its assets, under which there were no outstanding balances
as of December 31, 1999. As of December 31, 1999 none of the $62.4 million in
net proceeds from Jupiter's initial public offering had been utilized.
Jupiter expects to spend approximately $14.0 million in 2000 on
technology, including computer system enhancements, leasehold improvements,
expansion of operations and telecommunications upgrades. Jupiter anticipates
that it will continue to increase its capital expenditures and lease commitments
consistent with its anticipated growth in operations, infrastructure and
personnel. In addition, Jupiter anticipate that it will continue to evaluate
investments in other businesses, and continue to expand its sales and marketing
programs and conduct more aggressive brand promotions, any of which could reduce
its liquidity. Jupiter also anticipates that it will continue to experience
growth in its operating expenses to support its revenue growth, including the
introduction of new Research Services.
Jupiter believes that its available funds will be sufficient to meet its
anticipated cash needs for working capital and capital expenditures for at least
the next 12 months.
Jupiter's financial exposure due to the effects of fluctuations in
foreign currency rates is not material.
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<PAGE> 138
RECENT ACCOUNTING PRONOUNCEMENTS
Jupiter continually assesses the effects of recently issued accounting
standards. The impact of all recently adopted and issued accounting standards
has been disclosed in Jupiter's audited financial statements and the notes to
those statements in this joint proxy statement/prospectus.
EFFECTS OF INFLATION
Due to relatively low levels of inflation in 1998, 1999 and the first
quarter of 2000, inflation has not had a significant impact on Jupiter's results
of operations.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Currency Rate Fluctuation. Jupiter's results of operations, financial
position and cash flows are not materially affected by changes in the relative
values of non-U.S. currencies to the U.S. dollar. Jupiter does not use
derivative financial instruments to limit its foreign currency risk exposure.
Market Risk. Jupiter's accounts receivable are subject, in the normal
course of business, to collection risks. Jupiter regularly assesses these risks
and have established policies and business practices to protect against the
adverse effects of collection risks. As a result, Jupiter does not anticipate
any material losses in this area.
Interest Rate and Credit Risks. Jupiter's exposure to market risk for
changes in the interest rates relates primarily to its investment portfolio.
Jupiter has not used derivative financial instruments in its investment
portfolio. Jupiter invests its excess cash in debt instruments of the U.S.
Government and its agencies and in high-quality corporate issuers and, by
policy, limits the amount of credit exposure to any one issuer. Jupiter protects
and preserves its invested funds by limiting default, market and reinvestment
risk.
Investments in both fixed rate and floating rate interest-earning
instruments carry a degree of interest rate risk. Fixed rate securities may have
their fair market value adversely impacted due to a rise in interest rates,
while floating rate securities may produce less income than expected if interest
rates fall. Due in part to these factors, Jupiter's future investment income may
fall short of expectations due to changes in interest rates or Jupiter may
suffer losses in principal if forced to sell securities which have declined in
market value due to changes in interest rates.
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<PAGE> 139
COMPARISON OF STOCKHOLDER RIGHTS
General
After the merger, stockholders of Jupiter will become stockholders of
Media Metrix. Their rights will then be governed by Media Metrix' charter and
bylaws. Presently, Jupiter stockholders' rights are governed by Jupiter's
charter and bylaws. Both companies are incorporated in Delaware, so the Delaware
General Corporation Law will continue to govern the rights of former Jupiter
stockholders after the merger. Except for the proposals set forth in this joint
proxy statement/prospectus, the provisions of the Media Metrix charter after the
merger will be identical to those of the current Media Metrix charter. The
following summary discusses differences between the Jupiter charter and bylaws
and the Media Metrix charter and bylaws. This summary is not a complete
statement of all differences between rights of the holders of Media Metrix
common stock and Jupiter common stock and is qualified by the full text of each
document and the Delaware General Corporation Law. For information as to how to
get those documents, please see "Where You Can Find More Information" on page
133.
Number of Directors
The Media Metrix bylaws provide that the number of directors will not be
less than one. The Media Metrix charter provides that the board of directors
shall consist of six directors. The number of directors may be increased by
resolution of the board of directors adopted by the affirmative vote of a
majority of the continuing directors. After the merger, the board of directors
will consist of nine directors, of which five will be Media Metrix directors and
four will be Jupiter designees. Please see "Board of Directors and Executive
Officers of Jupiter Media Metrix After the Merger" at page 66. for more details
about the composition of the board of directors of Media Metrix following the
merger.
Jupiter's charter provides that the Jupiter board of directors will
consist of not less than three directors and not more than fifteen directors.
The Jupiter board of directors currently consists of five directors. The number
of directors is determined by resolution of the Jupiter board of directors
adopted by a majority of the directors present at a meeting where a quorum is
present or by a plurality vote of the stockholders at the annual meeting.
Removal of Directors
The Media Metrix bylaws provide that stockholders may remove any
director from office only for cause and by the affirmative vote of the holders
of a majority of the issued and outstanding shares of Media Metrix common stock
entitled to vote at a duly called annual or special meeting.
The Jupiter charter provides that stockholders may remove any director
or the entire board of directors from office only for cause and by the
affirmative vote of the holders of 66.67% of the issued and outstanding shares
of Jupiter common stock entitled to vote.
Special Meetings
The Media Metrix charter provides that special meetings of stockholders
can be called only by the Chairman of the Board or by the Secretary of Media
Metrix when a majority of the board of directors requests in writing a special
meeting. If the Secretary calls the meeting, he or she must do so within 10 days
after receipt of the written request.
The Jupiter bylaws provide that a special meeting of the stockholders
can be called by the Chairman of the Board of Directors or the President and
must be called by the Chairman of the Board, the President or the Secretary at
the request in writing of two-thirds of the board of directors.
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<PAGE> 140
Advance Notice Provisions for Stockholder Nominations and Stockholder Proposals
Media Metrix has no provision in its charter providing for advance
notice of a stockholder proposal or of a nomination of a person for election to
the board of directors.
However, the SEC's rules, which apply to both Media Metrix and Jupiter,
provide that any stockholder proposal submitted for inclusion in the proxy
statement for an annual meeting must be submitted not less than 120 days before
the anniversary of the date of the company's proxy statement released to
stockholders in connection with the previous year's annual meeting. The rules
also provide various methods by which a stockholder must prove his or her
eligibility to submit a proposal and what additional information must be
submitted to the company for inclusion in the proxy statement.
In addition to complying with the SEC rules, a Jupiter stockholder must
also comply with the following notice provisions.
In the case of an annual meeting of Jupiter stockholders, the Jupiter
bylaws require that a stockholder who wishes to nominate a person for election
to the board of directors or properly bring business before an annual meeting
must deliver a notice to the secretary of Jupiter on a timely basis and the
business proposed must be a proper matter for stockholder action. To be timely,
the notice must be delivered to the Secretary at Jupiter's principal executive
offices not later than 90 days and not earlier than 120 days prior to the first
anniversary of the date of the preceding year's annual meeting. However, if
either the date of the annual meeting is more than 30 days before or more than
70 days after such anniversary date, notice by the stockholder to be timely must
be delivered not earlier than 120 days prior to such annual meeting and not
later than the close of business on the later of 90 days prior to such annual
meeting or 10 days after the public announcement of the date of the meeting.
In the case of a special meeting of Jupiter stockholders, the Jupiter
bylaws indicate that any stockholder entitled to vote in the election of the
directors may nominate a person for election. A stockholder wishing to nominate
a person at a special meeting must deliver a notice to the secretary of Jupiter
on a timely basis. To be timely, the notice must be received at Jupiter's
principal executive offices not earlier than 120 days prior to such special
meeting and not later than the later of 90 days prior to such special meeting or
10 days after the public announcement of the date of the special meeting.
In either case, the Jupiter bylaws require that the notice include the
following:
- the name and address of the nominating stockholder;
- the class and number of shares of Jupiter common stock
beneficially owned by such stockholder;
- a representation that the stockholder intends to appear in
person or by proxy at the annual or special meeting; and
- a representation that the stockholder or the beneficial owner
intends or is part of a group which intends to deliver a
proxy statement or otherwise solicit proxies in support of
its nomination or proposal; and
if the stockholder is nominating a person for election to the board of
directors, the nominating stockholder must provide:
- the written consent of the nominee to serve as a director, if
elected;
- the nominee's name, age, business and residence addresses and
principal occupation or employment; and
- 131 -
<PAGE> 141
- the class and number of shares of Jupiter common stock
beneficially owned by the nominee; and
if the stockholder submits a proposal, he or she must provide:
- the text of the proposal or business including the text of
any resolutions proposed for consideration and in the event
that such business included a proposal to amend the bylaws of
Jupiter, the language of the proposed amendment;
- a statement regarding the reasons for conducting such
business at the meeting and any material interest in such
business of such stockholder; and
- a statement as to the beneficial owner, if any, on whose
behalf the proposal is made.
Amendment of Charter
Under Delaware law, the charter of a Delaware corporation may be amended
by approval of the board of directors of the company and the affirmative vote of
the holders of a majority of the outstanding shares entitled to vote for the
amendment, unless a higher vote is required by the corporation's charter.
Media Metrix' charter provides that, in addition to the approval
required under Delaware law, an amendment or repeal of any provision relating to
the classified board of directors or the removal of directors will require the
affirmative vote of either:
- a majority of the continuing directors; or
- the affirmative vote of holders of:
- 80% of the outstanding shares of capital stock entitled
to vote; and
- if an interested stockholder is proposing the amendment,
66.67% of the outstanding shares of capital stock
entitled to vote which are not beneficially owned by the
interested stockholder.
Jupiter's charter provides that the provisions of the charter which
relate to directors, stockholder meetings, limitation of directors' liability,
indemnification and amendment of the charter may not be repealed, altered,
amended or rescinded unless the action is approved by the affirmative vote of
66.67% of the outstanding shares of capital stock of Jupiter entitled to vote
generally in the election of directors.
Amendment of Bylaws
Generally, Media Metrix' bylaws may be altered, amended or repealed by a
majority of directors then constituting the board of directors of Media Metrix
at regular or special meetings of the board of directors. The provisions in the
bylaws relating to special meetings of stockholders, the number, election and
term of directors, director vacancies, additional directors and removal of
directors from office, and amendment to the bylaws, may not, however, by
repealed or amended, and no provision inconsistent with these provisions may be
adopted by the stockholders unless such action is approved by either:
- a majority of the continuing directors; or
- the affirmative vote of the holders of:
- 80% of the outstanding shares of capital stock entitled
to vote; and
- if an interested stockholder is proposing the amendment,
66.67% of the outstanding shares of capital stock
entitled to vote which are not beneficially owned by the
interested stockholder.
- 132 -
<PAGE> 142
Following the merger, the bylaws of Jupiter Media Metrix will provide
that any vacancy in a Media Metrix-appointed director's board seat must be
filled by a person nominated by the remaining Media Metrix-appointed directors,
and any vacancy in a Jupiter-appointed director's board seat must be filled by a
person nominated by the remaining Jupiter-appointed directors. This bylaw may be
amended to change this system of appointing replacement directors, but only by a
majority vote of the entire board of directors or by the stockholders of Jupiter
Media Metrix.
The Jupiter bylaws may be repealed, altered, amended or rescinded by the
stockholders of Jupiter by vote of not less than 66.67% of the outstanding
shares of capital stock of Jupiter entitled to vote generally in the election of
directors. Additionally, the board of directors of Jupiter may repeal, alter,
amend or rescind the Jupiter bylaws by a vote of 66.67% of the board of
directors.
WHERE YOU CAN FIND MORE INFORMATION
Media Metrix has filed a registration statement on Form S-4 to register
with the SEC the Media Metrix common stock to be issued to Jupiter stockholders
in the merger. This joint proxy statement/prospectus is a part of that
registration statement and constitutes a prospectus of Media Metrix in addition
to being a joint proxy statement of both Media Metrix and Jupiter for their
respective special stockholders meetings. As allowed by SEC rules, this joint
proxy statement/prospectus does not contain all the information you can find in
the registration statement or the exhibits to the registration statement.
In addition, Media Metrix and Jupiter file reports, proxy statements and
other information with the SEC under the Exchange Act. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. You may
read and copy this information at the following locations of the SEC:
<TABLE>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
</TABLE>
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. The SEC also maintains an Internet World Wide
Web site that contains reports, proxy statements and other information about
issuers, including Media Metrix and Jupiter, who file electronically with the
SEC. The address of that site is http://www.sec.gov. You can also inspect
reports, proxy statements and other information about Media Metrix and Jupiter
at the offices of the National Association of Securities Dealers, 1735 K Street,
N.W., Washington, D.C. 2006.
The SEC allows Media Metrix to "incorporate by reference" information
into this joint proxy statement/prospectus. This means that Media Metrix can
disclose important information to you by referring you to another document filed
separately with the SEC. The information incorporated by reference is considered
to be a part of this joint proxy statement/prospectus, except for any
information that is superseded by information that is included directly in this
joint proxy statement/prospectus.
This joint proxy statement/prospectus incorporates by reference the
documents listed below that Media Metrix has previously filed with the SEC. They
contain important information about Media Metrix and its financial condition.
Some of these filings have been amended by later filings, which are also listed.
- 133 -
<PAGE> 143
Media Metrix SEC Filings
- Registration Statement on Form 8-A, dated May 3, 1999
- Annual Report on Form 10-K for the fiscal year ended December 31, 1999
- Quarterly Report on Form 10-Q for the quarter ended March 31, 2000
- Current Report on Form 8-K, dated March 20, 2000
- Definitive Proxy Statement on Schedule 14A, dated April 13, 2000
- Current Report on Form 8-K, dated June 27, 2000
We incorporate by reference any additional documents that Media Metrix may
file with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act between the date of this joint proxy statement/prospectus and the date of
the Media Metrix special stockholders meeting. These documents include periodic
reports, including Quarterly Reports on Form 10-Q and Current Reports on Form
8-K, as well as proxy statements.
You can obtain any of the documents incorporated by reference in this joint
proxy statement/prospectus from the SEC through the SEC's web site at the
address provided above. Documents incorporated by reference are also available
from Media Metrix without charge, excluding any exhibits to those documents
unless the exhibit is specifically incorporated by reference as an exhibit in
this joint proxy statement/prospectus. You can obtain these documents by
requesting them in writing or by telephone from Media Metrix at the following
address:
Media Metrix, Inc.
250 Park Avenue South
New York, New York 10003
Attention: Investor Relations
Telephone No.: (212) 515-8700
Jupiter SEC Filings
Jupiter will send you copies of documents it has filed with the SEC,
excluding exhibits, without charge. You may contact Jupiter at:
Jupiter Communications, Inc.
627 Broadway
New York, New York 10012
Attention: Investor Relations
Telephone No.: (212) 780-6060
IF YOU WOULD LIKE TO REQUEST DOCUMENTS FROM EITHER COMPANY, PLEASE DO SO BY
[__________ ___, 2000] IN ORDER TO RECEIVE THEM BEFORE YOUR COMPANY'S SPECIAL
STOCKHOLDERS MEETING. If you request any incorporated documents from us, we will
mail them to you by first class mail, or another equally prompt means, within
one business day after we receive your request.
We have not authorized anyone to give any information or make any
representation about the merger of our companies that differs from, or adds to,
the information in this joint proxy
- 134 -
<PAGE> 144
statement/prospectus or in our documents that are publicly filed with the SEC.
Therefore, if anyone does give you different or additional information, you
should not rely on it.
If you are in a jurisdiction where it is unlawful to offer to exchange
or sell, or to ask for offers of exchange or to buy, the securities offered by
this joint proxy statement/prospectus or to ask for proxies, or if you are a
person to whom it is unlawful to direct these activities, then the offer
presented by this joint proxy statement/prospectus does not extend to you.
The information contained in this joint proxy statement/prospectus
speaks only as of its date unless the information specifically indicates that
another date applies. Information about Media Metrix has been supplied by Media
Metrix, and information about Jupiter has been supplied by Jupiter.
EXPERTS
Ernst & Young LLP, independent auditors, have audited the Media
Metrix consolidated financial statements and schedule included in the Media
Metrix Annual Report on Form 10-K for the year ended December 31, 1999, as set
forth in their report, which is incorporated by reference in this joint proxy
statement/prospectus and elsewhere in the registration statement. Media Metrix'
financial statements and schedules are incorporated by reference in reliance on
Ernst & Young LLP's report, given on their authority as experts in accounting
and auditing.
Ernst & Young LLP, independent auditors, also have audited the
financial statements of AdRelevance, Inc. at December 31, 1998 and for the
period from October 12, 1998 (the date of AdRelevance's inception) to December
31, 1998 as set forth in their report (which contains an explanatory paragraph
describing conditions that raise substantial doubt about AdRelevance's ability
to continue as a going concern as described in Note 1 to the financial
statements). We have included AdRelevance's financial statements in this joint
proxy statement/prospectus and elsewhere in the registration statement in
reliance on Ernst & Young LLP's report, given on their authority as experts in
accounting and auditing.
The consolidated financial statements of Jupiter and its
subsidiaries as of December 31, 1999 and 1998, and for each of the years in the
three year period ended December 31, 1999, included in this joint proxy
statement/prospectus have been so included in reliance on the report of KPMG,
LLP, independent accountants, appearing elsewhere herein, upon their authority
as experts in auditing and accounting.
The financial statements of Internet Research Group as of
December 31, 1998 and 1999, and for the years then ended, included in this joint
proxy statement/prospectus have been so included in reliance on the report of
KPMG, LLP, independent accountants, appearing elsewhere herein, upon their
authority as experts in auditing and accounting.
The financial statements of Net Market Makers as of
December 31, 1999 and for the year then ended, included in this joint proxy
statement/prospectus have been so included in reliance on the report of KPMG,
LLP, independent accountants, appearing elsewhere herein, upon their authority
as experts in auditing and accounting.
LEGAL MATTERS
Certain legal matters relating to the validity of the shares of
Media Metrix common stock offered by this joint proxy statement/prospectus will
be passed upon by its counsel, Fried, Frank, Harris, Shriver & Jacobson (a
partnership which includes professional corporations). Certain federal income
tax matters
- 135 -
<PAGE> 145
relating to the merger will be passed upon for Media Metrix by its counsel,
Fried, Frank, Harris, Shriver & Jacobson and for Jupiter by its counsel,
Brobeck, Phleger & Harrison LLP.
STOCKHOLDER PROPOSALS FOR ANNUAL MEETINGS
As described in Media Metrix' proxy statement on Schedule 14A relating to
its 2000 annual meeting of stockholders, any proposals that stockholders of
Media Metrix wish to be considered for inclusion in the proxy statement for its
2001 annual meeting of stockholders must be received by Media Metrix at its
principal executive offices no later than December 22, 2000. Any stockholder
proposals included in Media Metrix' proxy solicitation materials for its 2001
annual meeting or otherwise to be considered at the meeting will be subject to
the requirements of the Media Metrix bylaws and the proxy rules promulgated
under the Exchange Act.
If the merger agreement is terminated, Jupiter will hold its 2001 annual
meeting of stockholders in accordance with its bylaws. As described in Jupiter's
proxy statement on Schedule 14A relating to its 2000 annual meeting of
stockholders, in order for a proposal of stockholders of Jupiter to be
considered for inclusion in the proxy statement for its 2001 annual meeting, the
proposal must be received by Jupiter at its principal executive offices no later
than February 16, 2001. In addition, the proxy solicited by Jupiter's board of
directors for the annual meeting of stockholders to be held in 2001 will confer
discretionary authority to vote on any stockholder proposal presented at that
meeting unless Jupiter receives notice of such proposal on or before March 18,
2001.
-136-
<PAGE> 146
CONSOLIDATED FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
JUPITER COMMUNICATIONS, INC. PAGE
<S> <C>
Independent Auditors' Report ............................................................... F-2
Consolidated Balance Sheets as of December 31, 1998 and 1999 ............................... F-3
Consolidated Statement of Operations for the years ended December 31, 1997,
1998 and 1999 ........................................................................ F-4
Consolidated Statements of Stockholders Equity/Members Deficiency
for the years ended December 31, 1997, 1998 and 1999 ................................. F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1998 and 1999 ..................................................... F-6
Notes to Consolidated Financial Statements ................................................. F-7
INTERNET RESEARCH GROUP
Independent Auditors' Report ............................................................... F-20
Balance Sheets as of December 31, 1998 and 1999 ............................................ F-21
Statements of Operations for the years ended December 31, 1998 and 1999 .................... F-22
Statements of Shareholders' Equity for the years ended December 31, 1998 and 1999 .......... F-23
Statements of Cash Flows for the years ended December 31, 1998 and 1999 .................... F-24
Notes to Financial Statements .............................................................. F-25
NET MARKET MAKERS
Independent Auditors' Report ............................................................... F-31
Balance Sheets ............................................................................. F-32
Statements of Operations ................................................................... F-33
Statements of Shareholders' Equity ......................................................... F-34
Statements of Cash Flows ................................................................... F-35
Notes to Financial Statements .............................................................. F-36
ADRELEVANCE, INC.
Report of Independent Auditors ............................................................. F-40
Balance Sheets ............................................................................. F-41
Statements of Operations ................................................................... F-42
Statements of Shareholders' Equity (Deficit) ............................................... F-43
Statements of Cash Flows ................................................................... F-44
Notes to Financial Statements .............................................................. F-45
</TABLE>
F-1
<PAGE> 147
Jupiter Communications, Inc.
Financial Statements
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Jupiter Communications, Inc.
We have audited the accompanying consolidated balance sheets of Jupiter
Communications Inc. and subsidiaries as of December 31, 1999 and 1998, and the
related consolidated statements of operations, stockholders' equity/members'
deficiency and cash flows for each of the years in the three-year period ended
December 31, 1999. In connection with our audits of the consolidated financial
statements, we also have audited the financial statement schedule as listed in
the accompanying index. These consolidated financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Jupiter
Communications Inc. and subsidiaries, as of December 31, 1999 and 1998, and the
results of their operations and cash flows for each of the years in the
three-year period ended December 31, 1999 in conformity with generally accepted
accounting principles. Also in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, present fairly, in all material respects, the information set forth
therein.
/s/ KPMG LLP
New York, New York
February 7, 2000
F-2
<PAGE> 148
JUPITER COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, MARCH 31,
1998 1999 2000
---- ---- ----
ASSETS (UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents ............................................... $216,144 $57,222,154 $48,929,611
Short-term investments .................................................. -- 8,852,937 18,556,877
Accounts receivable, less allowance for doubtful
accounts of $37,915, $113,392 and $279,361 in 1998, 1999
and 2000, respectively ................................................ 4,579,856 17,849,722 20,839,417
Marketable securities ................................................... -- -- 3,425,352
Prepaid expenses and other current assets ............................... 797,168 3,156,851 4,334,645
------- --------- ---------
Total current assets .......................................... 5,593,168 87,081,664 96,085,902
Property and equipment, net .................................................. 1,071,432 5,131,095 7,134,427
Goodwill and other intangible assets, net .................................... 54,791 4,526,071 24,548,624
Other assets ................................................................. 147,630 440,744 1,522,744
------- ------- ---------
Total assets .................................................. $6,867,021 $97,179,574 $129,291,697
========== =========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY/MEMBERS
DEFICIENCY
Current liabilities:
Accounts payable ........................................................ $1,241,618 $2,764,013 $7,680,210
Accrued expenses ........................................................ 208,843 1,178,619 1,882,373
Accrued compensation .................................................... 841,624 2,515,680 1,163,858
Convertible note payable -- -- 1,442,291
Deferred revenue ........................................................ 6,677,233 25,594,018 33,095,495
--------- ---------- ----------
Total current liabilities ..................................... 8,969,318 32,052,330 45,264,227
Deferred rent ................................................................ 26,477 129,716 148,799
Convertible notes payable -- 3,500,000 --
Common stock, $0.001 par value: 100,000,000 shares
authorized, 14,499,573 shares issued and outstanding at
December 31, 1999 .......................................................... -- 14,500 15,083
Additional paid-in capital ................................................... 3,506,265 63,212,533 83,615,744
Deferred compensation -- (504,819) (468,759)
Accumulated deficit .......................................................... (5,635,039) (1,290,623) 1,903,618
Accumulated other comprehensive income ....................................... -- 65,937 (1,187,015)
-- ------ -----------
Total stockholders' equity/members'
deficiency .................................................. (2,128,774) 61,497,528 83,878,671
Commitments and contingencies ................................................ -- -- --
-- -- --
---------- ----------- ------------
Total liabilities and stockholders'
equity/members' deficiency .................................. $6,867,021 $97,179,574 $129,291,697
========== =========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 149
JUPITER COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
1997 1998 1999 1999 2000
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues:
Research Services ............................ $1,850,154 $6,183,188 $23,133,867 $3,446,767 $11,232,869
Conferences .................................. 3,426,079 4,889,703 11,269,950 1,724,486 5,117,716
Other ........................................ 3,228,919 3,674,934 3,680,468 845,390 809,115
--------- --------- --------- ------- -------
Total revenues ..................... 8,505,152 14,747,825 38,084,285 6,016,643 17,159,700
Cost of services and fulfillment .................. 6,259,433 9,675,838 16,897,660 2,955,210 6,664,417
--------- --------- ---------- --------- ---------
Gross profit ....................... 2,245,719 5,071,987 21,186,625 3,061,433 10,495,283
Other operating expenses:
Sales and marketing .......................... 1,557,676 3,173,368 11,383,673 1,750,135 5,208,720
General and administrative expenses .......... 2,855,589 3,897,096 10,100,267 1,511,023 5,179,513
Depreciation and amortization ................ 99,751 193,410 1,278,241 124,458 881,163
------ ------- --------- ------- -------
Total other operating expenses ..... 4,513,016 7,263,874 22,762,181 3,385,616 11,269,396
Interest income ................................... 17,000 54,506 743,484 2,918 908,794
Gain on sale of investments ....................... -- -- -- -- 5,894,601
Income (loss) before income taxes ................. (2,250,297) (2,137,381) (832,072) (321,265) 6,029,282
Income tax benefit (expense) ...................... -- -- 202,000 -- (2,835,041)
----------- ----------- --------- ---------- -----------
Net income (loss) .................. $(2,250,297) $(2,137,381) $(630,072) $(321,265) $3,194,241
=========== =========== ========= ========= ==========
Pro forma basic net income (loss) per
common share ................................... $(0.21) $(0.05) $(0.03) $0.22
====== ====== ====== =====
Pro forma diluted net income (loss) per
common share ................................... $(0.21) $(0.05) $(0.03) $0.20
====== ====== ====== =====
Pro forma basic weighted average
common shares outstanding ...................... 10,318,359 11,564,816 10,318,359 14,602,999
========== ========== ========== ==========
Pro forma diluted weighted average
common shares outstanding ...................... 10,318,359 11,564,816 10,318,359 15,901,104
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 150
JUPITER COMMUNICATIONS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY/MEMBERS' DEFICIENCY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997, 1998 AND 1999
<TABLE>
<CAPTION>
COMMON STOCK
------------
ADDITIONAL
NUMBER PAR PAID-IN DEFERRED
OF SHARES VALUE CAPITAL COMPENSATION
--------- ----- ------- ------------
<S> <C> <C> <C> <C>
Balance at December 31, 1996 -- -- 533,051 --
Contributions made by members 2,996,175
Distributions paid to members (22,961)
Net loss
---------- ------ ---------- ---------
Balance at December 31, 1997 -- -- 3,506,265 --
Net loss
---------- ------ ---------- ---------
Balance at December 31, 1998 -- -- 3,506,265 --
Exercise of member unit options 500,000
Issuance of units on acquisition of
Intelligence AB 808,300
Exercise of employee unit options 39,500
Issuance of units on acquisition of New
Media Holdings PTY Ltd 320,000
Issuance of unit options to
employees 576,937 (576,937)
Issuance of common stock on conversion
from LLC to a "C" corporation 11,222,327 11,222 (4,985,710)
Initial public offering proceeds,
net 3,258,750 3,259 62,433,167
Amortization of deferred
compensation 72,118
Exercise of stock option plans 18,496 19 14,074
Comprehensive loss:
Net loss
Cumulative translation adjustment
Total comprehensive loss
---------- ------ ---------- ---------
Balance at December 31, 1999 14,499,573 14,500 63,212,533 (504,819)
========== ====== ========== =========
Exercise of stock option plans (unaudited) 2,802 3 4,417
Amortization of deferred compensation
(unaudited) 36,060
Issuance of shares on acquisition of
IRG (unaudited) 581,044 581 20,398,794
Reserve for X-ceed FMV(unaudited)
Net income (loss) (unaudited)
Cumulative translation adjustment
(unaudited)
---------- ------ ---------- ---------
Balance at March 31, 2000 15,083,419 15,083 83,615,744 (468,759)
========== ====== ========== =========
</TABLE>
JUPITER COMMUNICATIONS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY/MEMBERS' DEFICIENCY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997, 1998 AND 1999
<TABLE>
<CAPTION>
ACCUMULATED TOTAL
OTHER STOCKHOLDERS'
ACCUMULATED COMPREHENSIVE EQUITY/MEMBERS
DEFICIT INCOME DEFICIENCY
------- ------ ----------
<S> <C> <C> <C>
Balance at December 31, 1996 (1,247,361) -- (714,310)
Contributions made by members 2,996,175
Distributions paid to members (22,961)
Net loss (2,250,297) (2,250,297)
---------- ----------
Balance at December 31, 1997 (3,497,658) -- 8,607
Net loss (2,137,381) (2,137,381)
---------- ----------
Balance at December 31, 1998 (5,635,039) -- (2,128,774)
Exercise of member unit options 500,000
Issuance of units on acquisition of
Intelligence AB 808,300
Exercise of employee unit options 39,500
Issuance of units on acquisition of New
Media Holdings PTY Ltd 320,000
Issuance of unit options to
employees --
Issuance of common stock on conversion
from LLC to a "C" corporation 4,974,488 --
Initial public offering proceeds,
net 62,436,426
Amortization of deferred
compensation 72,118
Exercise of stock option plans 14,093
Comprehensive loss:
Net loss (630,072) (630,072)
Cumulative translation adjustment 65,937 65,937
------
Total comprehensive loss (564,134)
---------- ------ --------
Balance at December 31, 1999 (1,290,623) 65,937 61,497,528
========== ====== ==========
Exercise of stock option plans (unaudited) 4,420
Amortization of deferred compensation
(unaudited) 36,060
Issuance of shares on acquisition of
IRG (unaudited) 20,399,375
Reserve for X-ceed FMV(unaudited) (1,252,394) (1,252,394)
Net income (loss) (unaudited) 3,194,241 3,194,241
Cumulative translation
adjustment (unaudited) (558) (558)
-------- ----------- ----------
Balance at March 31, 2000 1,903,618 (1,187,015) 83,878,671
========= =========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 151
JUPITER COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
1997 1998 1999 1999 2000
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $(2,250,297) $(2,137,381) $(630,072) $(321,265) $3,194,241
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Equity loss from investment in Methodfive LLC 35,000 22,230 26,510 26,510 --
Non-cash gain related to investment
in Methodfive LLC -- -- -- -- (5,744,601)
Depreciation and amortization 99,751 193,410 1,278,241 124,458 899,178
Accretion of discount on convertible note payable -- -- 57,377 -- --
Provision for allowance for doubtful accounts 25,483 (13,568) 98,672 (3,381) 35,710
Amortization of deferred compensation -- -- -- -- 36,060
Deferred tax asset -- -- (202,000) -- --
Changes in operating assets and liabilities, net of
effect of acquisitions:
Increase in accounts receivable (328,142) (3,430,058) (13,379,720) (329,382) (2,476,959)
(Increase) decrease in prepaid expenses and
other current assets 13,073 (656,106) (2,329,067) (716,022) (1,171,034)
(Increase) decrease in security deposits 3,815 (79,589) (117,624) (78,873) --
Increase in accounts payable 397,337 38,040 1,375,400 215,249 4,675,724
Increase in accrued expenses 298,300 606,858 2,594,592 (356,285) (1,145,519)
Increase in deferred revenue 657,280 4,902,230 18,736,891 2,390,697 7,476,954
Increase (decrease) in deferred rent (13,138) (3,016) 103,239 129,256 19,083
------- ------ ------- ------- ------
Net cash provided by (used in) operating
activities (1,061,538) (556,950) 7,612,439 1,080,962 5,798,837
---------- -------- --------- --------- ---------
Cash flows from investing activities:
Capital expenditures (206,842) (838,037) (4,893,654) (447,073) (2,313,926)
Investment in Internet Content Report (25,000) -- -- -- --
Repayment of loan, related party -- -- -- 910 --
Investments in marketable securities -- -- (8,852,937) -- --
Purchase of investments -- -- -- -- (9,703,940)
Cash paid in connection with acquisition, net of cash
acquired -- -- 103,425 -- 23,675
-- -- ------- -- ------
Net cash used in investing activities (231,842) (838,037) (13,643,166) (446,163) 11,994,191)
-------- -------- ----------- -------- ----------
Cash flows from financing activities:
Proceeds from initial public offering, net -- -- 62,436,426 -- --
Member contributions, net 2,996,175 -- -- -- --
Exercise of unit options -- -- 553,592 -- 4,419
Distributions paid to members (22,961) -- -- -- --
Repayment of notes payable (70,000) -- -- -- (2,110,524)
Principal payments under capital lease obligation (3,447) (2,919) -- -- --
------ ------ -- -- --
Net cash provided by (used in) financing
activities 2,899,767 (2,919) 62,990,018 -- (2,106,105)
--------- ------ ---------- -- -----------
Increase (decrease) in cash and cash
equivalents 1,606,387 (1,397,906) 56,959,291 634,799 (8,301,459)
--------- ---------- ---------- ------- -----------
Effect of exchange rate changes on cash and cash
equivalents -- -- 46,719 -- 8,916
Cash and cash equivalents at beginning of year 7,663 1,614,050 216,144 216,144 57,222,154
----- --------- ------- ------- ----------
Cash and cash equivalents at end of year $1,614,050 $216,144 $57,222,154 $850,943 $48,929,611
========== ======== =========== ======== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for interest 8,694 11,855 -- -- --
===== ====== == == ==
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING
ACTIVITIES:
Acquisition of intangible asset by issuance of
convertible notes payable -- -- 3,442,623 -- --
Acquisition of goodwill acquired by
issuance of stock -- -- 1,128,300 -- --
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 152
JUPITER COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000 IS UNAUDITED)
(1) ORGANIZATION
Jupiter Communications, LLC (the "LLC") was organized on December 1, 1994
as a New York limited liability company. On October 8, 1999, in connection with
the completion of our initial public offering, the LLC was merged with and into
Jupiter Communications, Inc., a Delaware corporation ("Jupiter" or the
"Company"). Jupiter is a new media research firm that provides comprehensive
views of industry trends, forecasts and business decisions about the internet
economy. The Company's research services encompass Jupiter Research Services,
conferences, newsletters, book-length studies, and custom research reports and
provide clients and customers with focused research and strategic planning
support as they develop interactive products and services.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) PRINCIPLES OF CONSOLIDATION
The Company's consolidated financial statements as of and for the year
ended December 31, 1999 include the accounts of the Company, the accounts of
Intelligence SE AB("Intelligence"), a Swedish research company, from July 31,
1999 (date of acquisition) and the accounts of New Media Holdings PTY, Ltd.("New
Media Holdings"), an Australian research company, from October 7, 1999 (date of
acquisition). The consolidated financial statements for the prior year periods
include only the accounts of Jupiter. All significant inter-company balances and
transactions have been eliminated in consolidation.
(b) UNAUDITED INTERIM FINANCIAL INFORMATION
The interim financial statements of the Company for the three months ended
March 31, 1999 and 2000, included herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission (SEC). Certain information and note disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted pursuant to such rules and regulations relating to interim
financial statements.
In the opinion of management, the accompanying unaudited interim financial
statements reflect all adjustments consisting only of normal recurring
adjustments necessary to present fairly the financial position of the Company as
of March 31, 2000, and the results of its operations and cash flows for the
three months ended March 31, 1999 and 2000.
(c) USE OF ESTIMATES
The accompanying financial statements are prepared in accordance with U.S.
generally accepted accounting principles (GAAP). In preparing financial
statements in conformity with GAAP, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements and revenue and expenses during the reporting period. Actual results
could differ from those estimates.
(d) CURRENCY TRANSLATION AND TRANSACTIONS
F-7
<PAGE> 153
The reporting currency for the Company is the United States Dollar (USD).
The functional currency for the Company's operations is generally the applicable
local currency. Accordingly, the assets and liabilities of the subsidiaries
whose functional currency is other than the USD are included in the consolidated
financial statements by translating the assets and liabilities into the
reporting currency at the exchange rates applicable at the end of the reporting
year. The statements of operations and cash flows of such non-USD functional
currency operations are translated at the average exchange rate for the
reporting year. Translation gains or losses are accumulated as a separate
component of stockholders' equity/ members' deficiency. Currency transaction
gains or losses arising from transactions of the Company in currencies other
than the functional currency are included in operations for each reporting
period.
(e) CASH EQUIVALENTS
The Company considers all highly liquid investments with an original
maturity of three months or less at the time of acquisition to be cash
equivalents. Cash equivalents at December 31, 1999 consist primarily of
investments in highly rated debt securities. There were no cash equivalents at
December 31, 1998.
(f) SHORT-TERM INVESTMENTS
Management determines the appropriate classification of marketable debt
securities at the time of purchase and re-evaluates such designation as of each
balance sheet date. At December 31, 1999, the Company's investment portfolio
consisted of marketable debt securities classified as held-to-maturity, as
management has both the intent and ability to hold these securities to maturity,
and is carried at amortized cost, which approximates fair value. Income relating
to these securities is reported as interest income.
(g) IMPAIRMENT OF LONG-LIVED ASSETS
Long-lived assets and certain identifiable intangibles are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceeds the fair value of
the assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair market value, less costs to sell.
(h) PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is provided by the
straight-line method over the estimated useful lives of the respective assets,
which range from three to five years. Leasehold improvements are amortized on a
straight-line basis over the shorter of the lease term or their estimated useful
life. Additions and major improvements are capitalized, whereas the cost of
maintenance and repairs is charged to operations as incurred.
(i) GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill, resulting from business acquisitions and other intangible assets
are being amortized on a straight-line basis over their expected period of
benefit ranging from three to five years. Goodwill and other intangible assets
are stated net of total accumulated amortization of $95,209 and $451,742 at
December 31, 1998 and December 31, 1999, respectively.
F-8
<PAGE> 154
(j) FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash and cash equivalents, accounts receivable,
accounts payable, accrued expenses and deferred revenues approximated fair value
because of the relatively short maturity of these instruments. At December 31,
1999, it was not practicable to estimate the fair value of the convertible notes
payable for the acquisition of rights to profits from the Plug-in conference,
because there were no quoted market prices.
(k) STOCK-BASED COMPENSATION
The company accounts for stock based compensation under the
intrinsic-value based method of accounting prescribed by Accounting Principles
Board ("APB") Opinion No. 25, "Accounting for Stock Issues to Employees," and
discloses the effect of the difference in applying the fair value based method
of accounting on a pro-forma basis, as required by SFAS No. 123 "Accounting for
Stock-Based Compensation."
(l) PRO FORMA BASIC AND DILUTED NET LOSS PER COMMON SHARE
Pro forma basic and dilutive net loss per common share is computed by
dividing net loss by the pro forma weighted average number of common shares
outstanding for the period. Pro forma weighted average number of common shares
gives effect to the Company's reorganization from a limited liability company to
a corporation as though the organization had occurred as of January 1, 1998. Pro
forma weighted average number of common shares does not include any common stock
equivalents because inclusion of common stock equivalents would have been
anti-dilutive.
(m) REVENUE AND DEFERRED REVENUE COMMISSION EXPENSE RECOGNITION
Jupiter Research Services revenues are deferred and then reflected
proportionally in operations over the term of the service period, which is
generally up to one year. Conference revenues are reflected in operations when
the conference occurs. Newsletter subscriptions are deferred and then reflected
proportionally in operations over the term of the subscription, which is
generally up to one year. Book-length studies and custom research are reflected
in operations when the product is shipped.
Deferred revenue is composed of prepaid Jupiter Research Services fees to
be earned in the future over the term of the service period, prepaid conference
sponsorship/exhibition fees to be earned from conferences held after the balance
sheet date, and prepaid newsletter subscriptions to be earned in the future over
the term of the subscriptions.
(n) COST OF REVENUES AND COMMISSION EXPENSE RECOGNITION
Cost of revenues is primarily comprised of cost of research analysts,
direct costs incurred for conferences, payroll and travel related to Jupiter
Research Services product. The Company records prepaid commissions related to
Jupiter Research Services upon the signing of the contract and amortizes this
corresponding prepaid commission expense over the contract period in which the
related revenues are earned and amortized to income.
(o) INCOME TAXES
Prior to October 8, 1999, Jupiter Communications LLC (the "LLC") was
treated as a partnership for income tax purposes, and accordingly, income or
loss attributed to the LLC's operations was allocated to its members to be
reported on their separate income tax returns. Tax net operating losses incurred
during this period are not available to offset the Company's future taxable
income, if any.
F-9
<PAGE> 155
On October 8, 1999, the LLC was merged with and into the Company, a
Delaware corporation, and the surviving entity. Effective on this date, income
taxes are accounted for under Statement of Financial Accounting Standards No.
109, Accounting for Income Taxes. The Company recognizes both the current and
deferred tax consequences of all transactions that have been recognized in the
financial statements. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
results of operations in the period that the tax change occurs. Valuation
allowances are established, when necessary, to reduce deferred tax assets to the
amount expected to be realized.
(p) CREDIT RISK
Financial instruments that potentially subject the Company to a
concentration of credit risk consist of cash and cash equivalents and accounts
receivable. Cash is deposited with high credit quality financial institutions
and cash equivalents consist of highly rated debt securities. The Company's
customers are concentrated in the United States. The Company performs ongoing
credit evaluations of its customers' financial condition and generally does not
require collateral and establishes an allowance for doubtful accounts based upon
factors surrounding the credit risk of customers, historical trends and other
information. To date, such losses have been within management's expectations.
For each of the years in the three-year period ended December 31, 1999, no
customer accounted for more than 10% of revenues generated by the Company, or of
accounts receivable at December 31, 1999 and 1998.
(q) NET LOSS PER SHARE
The Company computes net loss per share in accordance with SFAS No. 128,
"Earnings Per Share". Basic net income per share is computed by dividing the net
income available to common stockholders for the period by the weighted average
number of common shares outstanding during the period. Diluted net income per
share is computed by dividing the net income for the period by the weighted
average number of common and common equivalent shares outstanding during the
period. Common equivalent shares, composed of incremental common shares issuable
upon the exercise of stock options and warrants, are included in net income per
share to the extent such shares are dilutive. Common stock equivalents were not
included in loss per share for any periods presented since they are
anti-dilutive.
(r) RECENT ACCOUNTING PRONOUNCEMENTS
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" ("SOP 98-1") which provides
guidance for determining whether computer software is internal-use software and
on accounting for the proceeds of computer software originally developed or
obtained for internal use and then subsequently sold to the public. It also
provides guidance on capitalization of the costs incurred for computer software
developed or obtained for internal use. SOP 98-1 will be effective for the
Company's fiscal year ending December 31, 1999. The adoption of SOP 98-1 did not
have a material impact on the Company's consolidated financial statements.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" which establishes standards for the reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements. Comprehensive income generally represents all changes in
stockholders' equity during the period except those resulting from investments
by or distributions to, stockholders. SFAS No. 130 is effective for fiscal years
beginning after December 15, 1997 and requires
F-10
<PAGE> 156
restatement of earlier periods presented. The adoption of this standard has
modified the Company's stockholders' equity and had no impact on the Company's
results of operations, financial position or cash flows.
In June 1997, the FASB issued SFAS No. 131, "Disclosures About Segments of
an Enterprise and Related Information" which establishes standards for the way
that a public enterprise reports information about operating segments in annual
financial statements, and requires that those enterprises report selected
information about operating segments in interim financial reports issued to
stockholders. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. SFAS No. 131 is
effective for fiscal years beginning after December 15, 1997, and requires
restatement of earlier periods presented. In the initial year of application,
comparative information for earlier years must be restated. The Company has no
reportable operating segments and adoption of this standard had no impact on the
Company's financial statements.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which establishes accounting and reporting
standards for derivative instruments, including derivative instruments embedded
in other contracts, and for hedging activities. SFAS No. 133 is effective for
all fiscal quarters of fiscal years beginning after June 15, 2000. This
statement is not expected to affect the Company as it currently does not engage
or plan to engage in derivative instruments or hedging activities.
(s) RECLASSIFICATION
Certain reclassifications have been made in prior years' financial
statements to conform to classifications used in the current year.
(3) ACQUISITIONS
INTELLIGENCE SE AB
On July 31, 1999, Jupiter acquired all of the stock of Intelligence, in
exchange for 137,000 Class B (non-voting) units at an aggregate value of
$808,300. The total purchase price for this transaction was $868,795, which
includes expenses incurred by the Company of $60,495 related to the merger.
Net liabilities acquired in the transaction were $133,151. The historical
carrying amounts of such net liabilities approximated their fair value. The
difference between the purchase price and the fair value of the acquired net
liabilities of Intelligence was recorded as goodwill in the amount of $1,001,946
and is being amortized on a straight line basis over its estimated useful life
of 4 years, the expected period of benefit.
NEW MEDIA HOLDINGS PTY, LTD.
On October 7, 1999, Jupiter acquired all of the stock of New Media
Holdings, in exchange for 20,000 Class B (non-voting) units at an aggregate
value of $320,000. The total purchase price for this transaction was $383,244,
which includes expenses incurred by the Company of $13,244 related to the merger
and a $50,000 note receivable that was outstanding at time of acquisition.
As there were no assets or liabilities at the time of the acquisition, the
purchase price of $383,244 was recorded as goodwill, which is being amortized on
a straight-line basis over its estimated useful life of 4 years, the expected
period of benefit.
The following unaudited pro forma consolidated financial information gives
effect to the acquisition of Intelligence and New Media Holdings, as if they had
occurred as of January 1, 1998, after giving effect to adjustment for
amortization of goodwill. The pro forma financial information does not
F-11
<PAGE> 157
necessarily reflect the consolidated results of operations that would have
occurred had the Company, Intelligence and New Media Holdings constituted a
single entity during such periods:
<TABLE>
<CAPTION>
1998 1999
----------- -----------
<S> <C> <C>
Revenues $14,910,825 $38,672,915
Net loss (2,700,679) (1,371,192)
Net loss per share (0.26) (0.12)
</TABLE>
(4) PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1999
-------- ----------
<S> <C> <C>
Deferred Jupiter Research Services commissions $632,406 $2,341,242
Prepaid conference expenses 101,974 315,683
Other 62,788 499,926
------ -------
$797,168 $3,156,851
======== ==========
</TABLE>
(5) PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1999
---------- -----------
<S> <C> <C>
Computer equipment $758,428 $3,341,164
Furniture and fixtures 178,892 728,936
Office equipment 96,623 295,897
Leasehold improvements 385,603 1,962,803
------- ---------
1,419,546 6,328,800
Less accumulated depreciation and amortization (348,114) (1,197,705)
-------- ----------
$1,071,432 $5,131,095
========== ==========
</TABLE>
Depreciation and amortization expense for 1997, 1998 and 1999 was $73,084,
$163,410 and $849,591, respectively.
(6) GOODWILL AND OTHER INTANGIBLE ASSETS
In June 1995, the Company acquired substantially all of the assets of the
Internet Business Report ("IBR") in exchange for a $140,000 promissory note,
payment of which was completed during 1997. The purchase price of $140,000 was
allocated as follows: $62,500 to the IBR subscriber list $62,500 to the IBR
trademark; and $15,000 for the editorial costs which were subsequently written
off. In 1999 the Company ceased publication of the Internet Business Report, and
any remaining amounts allocated to the subscriber list and trademark were
expensed.
In September 1997, the Company purchased the rights and interests in the
trademark "Internet Content Report" for $25,000. This included a subscriber list
with information regarding current and former subscribers. The purchase price
was allocated equally between the subscriber list and the trademark.
In November 1999, the Company purchased substantially all of the rights to
a portion of the net profits from "Plug-In," one of the annual conferences
sponsored by the Company, as well as the trademark. The aggregate purchase price
was $3.85 million, which was paid through the issuance of two $1.925 million
zero-coupon convertible promissory notes with a maturity date of January 7,
2001. The trademark has been recorded at the present value of the convertible
notes payable at $3,442,623.
F-12
<PAGE> 158
Goodwill and other intangible assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------
ESTIMATED
1998 1999 LIFE OF ASSET
------------- -------------- -------------
<S> <C> <C> <C>
Goodwill:
Sweden $0 $1,001,946 4
Australia 0 383,244 4
------ ------
0 1,385,190
Internet Content Report:
Subscriber list $12,500 $12,500 5
Trademark 12,500 12,500 5
------ ------
25,000 25,000
Internet Business Report:
Subscriber list 62,500 62,500 5
Trademark 62,500 62,500 5
------ ------
125,000 125,000
Plug-In Trademark -- 3,442,623 3
-- ---------
Gross goodwill and intangible assets 150,000 4,977,813
Less accumulated amortization (95,209) (451,742)
------- --------
$54,791 $4,526,071
======= ==========
</TABLE>
Amortization expense for 1997, 1998 and 1999 was $26,667, $30,000 and
$356,533, respectively.
(7) OTHER ASSETS
Other assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1998 1999
-------- --------
<S> <C> <C>
Investment in Methodfive, LLC $26,510 $0
Security Deposits 121,120 238,744
Deferred Taxes Assets, non-current 0 202,000
-------- --------
$147,630 $440,744
======== ========
</TABLE>
Jupiter has an investment in Methodfive LLC ("Methodfive"), formerly the
Myriad Agency, LLC, a Web site design and consulting company. For the years
ended December 31, 1998 and 1999, Methodfive experienced a net loss from
operations and the Company recorded its share of the loss in the accompanying
consolidated statements of operations. Jupiter's cumulative interest in
Methodfive as of December 31, 1998 and 1999 was approximately 17.4% and 8.0%,
respectively, and has been accounted for under the equity method.
As of December 31, 1999 the Company has fully written down its investment
as a result of the current financial position and recurring losses of
Methodfive. The Company has no future funding responsibilities with respect to
Methodfive and has an 8.0% passive interest.
(8) CONVERTIBLE NOTES PAYABLE
Notes payable reflects the two promissory notes issued on November 2,
1999, as consideration for purchase of additional rights to the net profits of
the Plug-in conference. The aggregate purchase price of $3.85 million was paid
to the Sellers through the issuance of two $1.925 million zero-coupon
convertible promissory notes. Each convertible promissory note provides for a
maturity date of January 7, 2001 and allows the holder of each convertible
promissory note to convert, at any time prior to the maturity date, all of the
outstanding indebtedness into 55,000 shares of the Company's common stock or to
redeem the notes for cash at a discount of 10% per annum, during the period
commencing April 14, 2000 and ending on April 24, 2000. In addition, each
convertible promissory note allows the Company after twelve months from the date
of the notes, and under certain circumstances, to convert all of the outstanding
F-13
<PAGE> 159
indebtedness into shares of the Company's common stock and for the holder, under
certain circumstances, to redeem in cash all or a portion of the outstanding
indebtedness. These notes have been reflected as convertible notes payable on
the consolidated balance sheet. In February 2000, the Company repaid one of the
notes at its accreted value of $1,760,524 on that date.
(9) DEFERRED REVENUE
Deferred revenue consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1998 1999
----------- -----------
<S> <C> <C>
Jupiter Research Services $ 5,638,847 $21,908,305
Conferences 783,912 3,111,032
Newsletter and other miscellaneous 254,474 574,681
----------- -----------
$ 6,677,233 $25,594,018
=========== ===========
</TABLE>
(10) OTHER REVENUES
Other revenues consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1997 1998 1999
---------- ---------- ----------
<S> <C> <C> <C>
Book length studies $1,518,545 $1,681,114 $1,807,971
Newsletter subscriptions 1,492,000 1,470,380 502,385
Custom research -- -- 990,000
Other 218,374 523,440 380,112
---------- ---------- ----------
$3,228,919 $3,674,934 $3,680,468
========== ========== ==========
</TABLE>
(11) STOCKHOLDERS' EQUITY/MEMBERS DEFICIENCY
During October 1997, Gartner Group, Inc. ("acquirer") purchased 3,515,624
Class C units of the Company for $8 million from both the Company and existing
members. The Company amended its operating agreement to allow current members to
sell all or part of their units to the acquirer. During 1997, existing members
sold 2,197,265 units for $5.0 million, and 1,318,359 units were purchased from
the Company for $3.0 million and recorded as capital contributions by the
Company, less $254,098 in offering costs. Class A and Class B units sold by
existing members to the acquiror automatically converted to Class C units upon
transfer on a one-for-one basis to the acquiror. Three members sold 100% of
their units to the acquiror. In addition, during 1997 capital contributions of
$250,273 were made by existing Class A and Class B equity members. During 1998,
an existing member sold 333,333 units for $1.25 million to the acquiror. After
completion of the transactions, the acquirer owned 37.3% of all outstanding
units as of December 31, 1998, and has two seats on the Board of Directors.
On July 31, 1999, the LLC acquired all of the stock of Intelligence, in
exchange for 137,000 Class B units.
On October 6, 1999, the LLC acquired all of the stock of New Media
Holdings in exchange for 20,000 Class B units.
On October 8, 1999, 100% of the members' units in the LLC were exchanged
at the ratio of 1:1 for the common shares in Jupiter Communications, Inc. Total
number of units exchanged for equal number of common shares was 11,222,327.
On October 14, 1999, Jupiter completed its IPO, which resulted in the sale
by the Company of 3,258,750 shares of common stock at $21.00 per share on the
Nasdaq National Market. The Company's net proceeds from the IPO, after deducting
underwriting discounts and offering expenses, were $62,433,167.
F-14
<PAGE> 160
(12) OPTIONS
(a) 1997 OPTION PLAN
During 1997, the Company established the 1997 Employee Unit Option Plan
(the "Plan"). Under the Plan, 1,590,000 Class B units shall be available for
grant. In 1999, the equity members authorized an increase in the number of units
reserved for issuance under the Plan from 1,590,000 to 2,750,000. Unit options
may be granted to key employees of the Company upon selection by the managing
members. The exercise price of a unit option shall be equal to the established
fair market value of the unit at the time of grant, in accordance with the
provisions of the Plan. These options vest ratably over a four-year period.
All unit options have a fixed term determinable by the managing members,
but no option shall be exercisable more than seven years after the date of
grant. Option exercisability is subject to the terms and conditions as
determined by the managing members. All unit options were granted with an
exercise price equal to the fair market value on the date of grant.
In July 1999, the Company issued 113,125 unit options to certain employees
at $5.90 per unit. The fair value of the Company's unit during July 1999 was
$11.00 per unit. Accordingly, the Company recorded deferred compensation of
approximately $576,937, representing the difference between the deemed fair
value of the Company's unit at the date of each grant and the exercise price of
the related options. The amount is presented as a reduction of stockholders'
equity/members' deficiency and amortized over the 4 year vesting period of the
applicable units. The Company has amortized $72,118 of total deferred
compensation in 1999.
On conversion of the Company from the LLC to an incorporated company, all
units were assumed by the incorporated company on a 1:1 ratio. No further
options will be granted under this plan.
(b) 1999 OPTION PLAN
During 1999, the Company established the 1999 Stock Incentive Plan (the
"1999 Plan"). Under the 1999 Plan, 5,000,000 shares will be available for grant
or issuance. The exercise price per share shall be equal to the established fair
market value per share at the time of the grant, in accordance with the
provisions of the 1999 Plan. Options granted under the 1999 Plan vest ratably
over a four-year period. No option shall be exercisable more than ten years
after the date of grant.
The activity under the combined Plans is as follows:
<TABLE>
<CAPTION>
WEIGHTED
UNIT AVERAGE
OPTIONS EXERCISE
GRANTED PRICE
------- -----
<S> <C> <C>
Outstanding at December 31, 1996 --
Granted 725,957 $ .50
----------
Outstanding at December 31, 1997 725,957 $ .50
----------
Granted 563,000 $ 2.08
----------
Outstanding at December 31, 1998 1,288,957 $ 1.19
----------
Granted 1,803,359 $ 7.64
Exercised (97,496) $ .55
Canceled (134,238) $ 3.21
----------
Outstanding at December 31, 1999 2,860,582 $ 5.19
==========
</TABLE>
The Company applies APB No. 25 and related interpretations in accounting
for its stock options issued to employees. Under APB No. 25, because the
exercise price of the Company's employee stock options equal the fair value of
the underlying common stock on the date of grant, no compensation cost has been
recognized for its stock option grants to employees and directors except for the
113,125 unit options granted in July 1999. Had compensation cost for the
Company's stock option grants been
F-15
<PAGE> 161
determined based on the fair value at the grant date for awards consistent with
the method of SFAS No. 123, the Company's net loss would have increased the pro
forma amounts for each year indicated below:
<TABLE>
<CAPTION>
1997 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
Net Loss:
As Reported $(2,250,297) $(2,137,381) $ (630,072)
=========== =========== ===========
Pro Forma (2,269,162) (2,216,536) (1,552,231)
=========== =========== ===========
</TABLE>
The resulting effect on the pro forma net loss disclosed for the year
ended December 31, 1997, 1998, and 1999 is not likely to be representative of
the effects on the net loss on a pro forma basis in the future years, because
the pro forma results include the impact of only one and two years respectively,
of grants and relating vesting, while subsequent years will include additional
grants and vesting.
The fair value of each option is estimated on the date of grant using the
Black Scholes method option-pricing model with the following weighted average
assumptions used for grants in 1997, 1998, 1999: dividend yield of zero (0%)
percent, risk-free interest rate ranging from 6% to 8% and expected life of 4
years. As permitted under the provisions of SFAS No. 123 and based on the
historical lack of a public market for the Company's stock, no factor for
volatility has been reflected in the option pricing calculation for 1997 and
1998. For 1999, the volatility factor is assumed to be 94.6%.
The following table summarizes information about options outstanding under
the Plan at December 31, 1999:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------- -------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
RANGE OF NUMBER REMAINING EXERCISE NUMBER EXERCISE
EXERCISE PRICE OUTSTANDING CONTRACTUAL LIFE PRICE EXERCISABLE PRICE
-------------- ----------- ---------------- ----- ----------- -----
<S> <C> <C> <C> <C> <C>
$ 0.50 618,973 4.4years $ 0.50 554,525 $ 0.50
$ 1.75 396,125 5.4 $ 1.75 144,938 $ 1.75
$ 3.00 931,025 6.1 $ 3.00 34,001 $ 3.00
$ 5.90 455,625 6.5 $ 5.90 -- --
$ 11.00 109,000 6.7 $ 11.00 -- --
$ 16.00 240,000 6.9 $ 16.00 -- --
$30.25--$38.50 109,834 9.9 $ 31.30 -- --
--------- ------- -------------
2,860,582 $ 5.23 733,464
========= ======= =============
</TABLE>
At December 31, 1999, the range of exercise prices and weighted-average
remaining contractual life of outstanding unit options under the Plan was
$0.50-$38.50 and 5.9 years, respectively.
In addition to the units granted under the Plans, during November 1996,
the Company granted unit investment options to three equity members in
conjunction with contributions made by those equity members. A total of 667,968
unit investment options were granted at a weighted average exercise price of
$0.75. All unit options were granted with an exercise price equal to the fair
market value on the date of grant and were immediately vested. During 1999 all
three equity members exercised all 667,968 unit investment options prior to the
initial public offering.
(13) EMPLOYEE BENEFIT PLANS
(a) EMPLOYEE STOCK PURCHASE PLAN
The 1999 Employee Stock Purchase Plan ("ESPP") was adopted by the board of
directors and approved by the stockholders. The plan became effective
concurrently with the IPO. The plan is designed to allow eligible employees of
Jupiter and its participating subsidiaries to purchase shares of the
F-16
<PAGE> 162
Company's common stock, at semi-annual intervals, through periodic payroll
deductions. A total of 500,000 shares may be issued under the plan.
The plan will have a series of successive offering periods, each with a
maximum duration of 24 months. However, the initial offering period will end on
the last business day in October 2001. The next offering period will begin on
the first business day in November 2001, and subsequent offering periods will be
set by our compensation committee.
A participant may contribute up to 15% of his or her cash earnings through
payroll deductions and the accumulated payroll deductions will be applied to the
purchase price of shares on the participant's behalf on each semi-annual
purchase date (the last business day in April and October of each year). The
purchase price will be 85% of the lower of the fair market value of our common
stock on the participant's entry date into the offering period or the fair
market value on the semi-annual purchase date. The first purchase date will
occur on the last business day in April 2000. In no event, however, may any
participant purchase more than 850 shares, nor may all participants in the
aggregate purchase more than 125,000 shares on any one semi-annual purchase
date. Should the fair market value of the common stock on any semi-annual
purchase date be less than the fair market value on the first day of the
offering period, then the current offering period will automatically end and a
new offering period will begin, based on the lower market value.
As of December 31, 1999 contributions totaling $481,911 had been made to
the ESPP and are reflected as accounts payable on the consolidated balance
sheet.
(b) 401(k) PROFIT SHARING PLAN
The Company has a 401(k) profit sharing plan for its employees. Employees
who have completed one year of service and attained age 21 are eligible to
participate. The Company makes a matching contribution equal to 50% for every
one dollar of each participant's contribution and applies such matching
percentage to the participant's salary reduction, up to 6% of the participant's
compensation. During 1997, 1998 and 1999, the Company's matching contribution
was $12,435, $38,882 and $145,351, respectively.
(14) COMMITMENTS AND CONTINGENCIES
(a) OFFICE LEASES
The Company leases office space at various locations. The future minimum
lease payments under non-cancelable operating leases (with initial or remaining
lease terms in excess of one year) as of December 31, 1999 are:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
<S> <C>
2000 $1,235,816
2001 1,201,361
2002 1,244,208
2003 1,271,483
2004 620,597
2005 and thereafter 2,725,293
---------
$8,298,758
==========
</TABLE>
Rent expense for the years ended December 31, 1997, 1998 and 1999 was
$335,063, $303,061 and $751,413, respectively.
During November 1999, the Company terminated its existing London operating
lease agreement that was due to expire in April 2005 and signed a new
thirteen-year operating lease agreement for a substantially larger parcel of
office space. The lease agreement calls for monthly payments with no
F-17
<PAGE> 163
scheduled increase in succeeding periods, although the rent amount can be
reviewed in November 2002 and November 2007. The future payments related to this
new lease agreement are reflected in the above schedule.
During January 1999, the Company terminated its existing New York
operating lease agreements that were due to expire in May 2000 and December 2001
and signed a new five-year operating lease agreement with the same landlord. The
new lease agreement covers the same office space as the terminated lease
agreement as well as additional office space. In connection with this lease
agreement, the Company received two months of free rent. The agreement also
calls for scheduled increases in succeeding periods. As such, the Company
records rent expense on a straight-line basis. The future payments related to
this new lease agreement are reflected in the above schedule, and the deferred
rent balance as of December 31, 1999 reflects the impact of the new lease.
(b) EQUIPMENT LEASE
Future minimum lease payments under non-cancelable operating leases as of
December 31, 1999 are:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
<S> <C>
2000 $80,416
2001 80,416
2002 63,906
2003 33,960
2004 9,750
Thereafter --
--
Total $268,448
========
</TABLE>
(15) INCOME TAXES
Income before provision for income taxes for the year ended December 31,
1999 consisted of:
<TABLE>
<S> <C>
Domestic Income -- LLC $ 875,682
Domestic Loss -- Corporate (1,215,394)
Foreign Loss (492,360)
-----------
$ (832,072)
===========
</TABLE>
The income tax benefit for the year ended December 31, 1999 of $202,000 is
entirely due to deferred tax benefits. The Company had no income tax provision
for the years ended December 31, 1997 and 1998, as it was a LLC during those
years, and all taxes were the responsibility of the members.
At December 31, 1999, for U.S. income tax purposes, the Company had
approximately $736,000 of net operating loss carryforwards from October 8, 1999
through December 31, 1999. Such net operating losses begin expiring in 2019.
The Company has determined that approximately $382,000 of net deferred tax
assets at December 31, 1999 did not satisfy the realization criteria set forth
in SFAS No. 109, Accounting for Income Taxes. Management believes that based on
all available evidence, it is more likely than not that a portion of the
deferred tax assets will not be realized. Accordingly, a valuation allowance was
recorded to reduce the deferred tax assets to the amount expected to be
realized.
The tax effects of temporary differences that give rise to significant
portions of the deferred tax liabilities are presented below:
<TABLE>
<S> <C>
Deferred tax assets:
Accounts receivable due to allowance for doubtful
accounts $15,000
Accrued expenses 55,000
Fixed assets due to differences in book vs. tax
depreciation 62,000
</TABLE>
F-18
<PAGE> 164
<TABLE>
<S> <C>
U.S. net operating loss carryforwards 314,000
Foreign net operating loss carryforwards 138,000
-------
Gross deferred tax assets 584,000
Valuation allowance (382,000)
--------
Net deferred tax assets $202,000
========
</TABLE>
(16) VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
BALANCE AT PROVISION BALANCE AT
BEGINNING FOR DOUBTFUL END OF
OF YEAR ACCOUNTS DEDUCTIONS YEAR
---------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
For the year ended December 31, 1997
Allowance for doubtful accounts......... $26,000 $25,483 $ -- $ 51,483
======= ======= ======== ========
For the year ended December 31, 1998
Allowance for doubtful accounts......... $51,483 $ -- $(13,568) $ 37,915
======= ======= ======== ========
For the year ended December 31, 1999
Allowance for doubtful accounts......... $37,915 $98,672 $(23,195) $113,392
======= ======= ======== ========
</TABLE>
(17) SUBSEQUENT EVENTS -- UNAUDITED
The Company has reached definitive agreements to acquire all of the stock
of two privately held companies, Internet Research Group, and Net Market Makers,
for an aggregate consideration of approximately $50.6 million in cash and common
stock. The Company completed its acquisition of Internet Research Group in March
2000. The Company expects to close on the acquisition of Net Market Makers prior
to April 15, 2000. The Company will record the acquisitions under the purchase
method of accounting.
F-19
<PAGE> 165
INTERNET RESEARCH GROUP
FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Internet Research Group:
We have audited the accompanying balance sheets of Internet Research Group
(the Company) as of December 31, 1998 and 1999, and the related statements of
operations, shareholders' equity, and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Internet Research Group as
of December 31, 1998 and 1999, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
San Francisco, California
March 16, 2000
F-20
<PAGE> 166
INTERNET RESEARCH GROUP
BALANCE SHEETS
DECEMBER 31, 1998 AND 1999
<TABLE>
<CAPTION>
ASSETS 1998 1999
---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $46,116 -
Trade accounts receivable, less allowance for doubtful accounts of
$0 and $119,721 in 1998 and 1999, respectively
580,483 1,000,966
Employee receivable 1,100 $1,100
------- ---------
Total current assets 627,699 1,002,066
Property and equipment, net 29,268 85,700
Costs and estimated earnings in excess of billings on contracts in
progress 47,055 -
Security deposits 10,713 15,196
------- ---------
Total assets $714,735 $1,102,962
======== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Cash overdraft $- $8,253
Trade accounts payable 72,215 257,340
Accrued liabilities 76,012 317,274
Deferred revenue 294,149 281,948
Borrowings under line of credit - 100,000
Loan payable to shareholders 110,000 -
------- ---------
Total current liabilities $552,376 $964,815
======== ========
Commitments
Shareholders' equity:
Common stock, no par value; 10,000,000 shares authorized; 5,000,000 and
6,250,000 shares issued and outstanding in 1998 and 1999,
respectively $1,000 $2,459,990
Deferred compensation expense - (1,494,672)
Retained earnings (accumulated deficit) 161,359 (827,171)
Total shareholders' equity 162,359 138,147
------- ---------
Total liabilities and shareholders' equity $714,735 $1,102,962
======== ==========
</TABLE>
See accompanying notes to financial statements.
F-21
<PAGE> 167
INTERNET RESEARCH GROUP
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1998 AND 1999
<TABLE>
<CAPTION>
1998 1999
---- ----
<S> <C> <C>
Revenue:
Consulting and other services revenue $2,271,460 $3,791,660
Other income 81,179 35,438
---------- ----------
Total revenue 2,352,639 3,827,098
Expenses:
Selling, general, and administrative (excluding stock compensation expense of
$0 and $963,068 in 1998 and 1999, respectively) 2,346,941 3,850,175
Stock compensation expense - 963,068
---------- ----------
Operating income (loss) 5,698 (986,145)
Interest income 3,652 2,925
Interest expense (2,666) (4,510)
---------- ----------
Income (loss) before income taxes 6,684 (987,730)
Income tax expense 800 800
---------- ----------
Net income (loss) $5,884 $(988,530)
====== =========
</TABLE>
See accompanying notes to financial statements.
F-22
<PAGE> 168
INTERNET RESEARCH GROUP
STATEMENTS OF SHAREHOLDERS' EQUITY
DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
COMMON STOCK
------------
RETAINED
DEFERRED EARNINGS TOTAL
COMPENSATION (ACCUMULATED SHAREHOLDERS'
SHARES AMOUNT EXPENSE DEFICIT) EQUITY
------ ------ ------- ----------- ------
<S> <C> <C> <C> <C> <C>
Balances as of December 31, 1997 5,000,000 $1,000 - $303,475 $304,475
Distributions to shareholders - - - (148,000) (148,000)
Net income - - - 5,884 5,884
--------- ------ ------------ -------- --------
Balances as of December 31, 1998 5,000,000 1,000 - 161,359 162,359
Purchase of common stock by shareholders 1,250,000 32,500 - - 32,500
Contribution by shareholders - 825,000 - - 825,000
Compensation expense for options - 1,601,490 $(1,601,490) - -
Amortization of deferred compensation expense - - 106,818 - 106,818
Net loss - - - (988,530) (988,530)
--------- ------ ------------ -------- --------
Balances as of December 31, 1999 6,250,000 $2,459,990 $(1,494,672) $(827,171) $138,147
========= ========== =========== ========= ========
</TABLE>
See accompanying notes to financial statements.
F-23
<PAGE> 169
INTERNET RESEARCH GROUP
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998 AND 1999
<TABLE>
<CAPTION>
1998 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $5,884 $(988,530)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation 17,370 17,956
Amortization of deferred compensation expense - 106,818
Issuance of common stock for services - 856,250
Changes in operating assets and liabilities: .
Accounts receivable, net (235,325) (420,483)
Costs and estimated earnings in excess of billings on
contracts in progress (47,055) 47,055
Other assets 14,263 (4,483)
Trade accounts payable 53,123 185,125
Accrued liabilities 11,930 241,262
Deferred revenue 294,149 (12,201)
------- -------
Net cash provided by operating activities 114,339 28,769
------- ------
Cash flows used in investing activities - purchase of property and
equipment (39,211) (74,388)
------- -------
Cash flows from financing activities:
Distributions to shareholders (148,000) -
Purchase of common stock by new shareholders - 1,250
Proceeds from line of credit - 100,000
Proceeds from loans from shareholders 110,000 -
Repayment of loans from shareholders - (110,000)
-------- --------
Net cash used in financing activities (38,000) (8,750)
-------- ------
Net increase (decrease) in cash and cash equivalents 37,128 (54,369)
Cash and cash equivalents at beginning of year (8,253) 46,116
------- ------
Cash and cash equivalents at end of year $28,875 $(8,253)
======= =======
Supplemental disclosures of cash flow information: Cash paid during the year:
Interest $2,666 $4,510
====== ======
Income taxes $800 $800
==== ====
</TABLE>
See accompanying notes to financial statements.
F-24
<PAGE> 170
INTERNET RESEARCH GROUP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1999
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES
(a) DESCRIPTION OF BUSINESS
Internet Research Group (the Company) is a research and consulting firm
that specializes in developing business, sales, and market development
strategies for Internet-related companies. The Company helps high technology
companies through a combination of extensive interviews, market segmentation,
and modeling. The research and publishing division, founded in 1997, produces
in-depth technology and market analysis services and other information,
communication, and consulting services that define and characterize Internet
markets.
(b) CONSULTING AND OTHER SERVICES REVENUE
Consulting and other services revenue consists of consulting services,
reports, and Website sponsorship revenues, as well as reimbursement of certain
expenses by customers.
Revenue for consulting services performed is recognized using the
percentage-of-completion method as the costs of performing the work are
incurred. Periodic reviews are made as work progresses and a provision is made
for any estimated unrecoverable amounts. Anticipated losses on contracts in
progress are provided in full when known.
Report revenue is recognized upon shipment of final report to customer.
Website sponsorship revenue is recognized over the term of the contract.
The asset "costs and estimated earnings in excess of billings on contracts
in progress" represents revenue recognized in advance of billings. The liability
"deferred revenue" represents billings in excess of revenue recognized.
(c) CASH AND CASH EQUIVALENTS
Cash and cash equivalents of $46,116 as of December 31, 1998 consist of
checking and money market accounts with a bank. The Company considers all highly
liquid debt instruments with remaining maturities of three months or less when
acquired to be cash equivalents.
(d) PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and are depreciated using the
straight-line method over the estimated useful lives of the assets of three to
five years.
(e) INCOME TAXES
The Company has received S corporation status from the Internal Revenue
Service. Under the applicable statutory rules for Federal tax purposes, income
and loss of an S corporation flow through to the shareholder of the corporation
and are not taxed at the corporate level. The state of California, however,
assesses a franchise tax equal to the greater of $800 or 1-1/2% of taxable
income for corporations electing S corporation status.
F-25
<PAGE> 171
(f) USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(g) COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted the provisions of the
Financial Accounting Standards Board's (FASB) Statement of Financial Accounting
Standards (SFAS) No. 130, Reporting Comprehensive Income. SFAS No. 130
established standards for the display of comprehensive income and its components
in a full set of financial statements. Comprehensive income includes all changes
in equity during a period except those resulting from the issuance of shares of
stock and distributions to shareholders. There were no differences between net
income and comprehensive income during the years ended December 31, 1998 and
1999.
(h) STOCK-BASED COMPENSATION
SFAS No. 123, Accounting for Stock-Based Compensation, sets forth
accounting and reporting standards for stock-based employee compensation. As
permitted by SFAS No. 123, the Company accounts for stock option grants using
the intrinsic-value method in accordance with Accounting Principles Board (APB)
Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations. Deferred compensation expense associated with stock-based
compensation is being amortized on a straight-line basis over the vesting period
of the individual award.
(i) IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF
The Company accounts for long-lived assets in accordance with the
provisions of SFAS No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of. This statement requires that
long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceeds the fair value of
the assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell.
(2) RELATED PARTY TRANSACTIONS
LOANS PAYABLE TO SHAREHOLDERS
The Company had loans payable to shareholders totaling $110,000 as of
December 31, 1998. The loans were repaid in full on January 29, 1999. There were
no loans outstanding as of December 31, 1999. Interest expense incurred on the
loans was approximately $0 and $1,100 in 1998 and 1999, respectively.
F-26
<PAGE> 172
(3) CONTRACTS IN PROGRESS
Information with respect to the billing status of consulting contracts in
progress as of December 31, 1998 and 1999, is as follows:
<TABLE>
<CAPTION>
1998 1999
---- ----
<S> <C> <C>
Costs incurred on contracts in progress $ 47,055 271,034
Estimated earnings -- $ 180,690
47,055 451,724
Less billings to date 294,149 733,672
$(247,094) $(281,948)
Included in the accompanying balance sheets under the following captions:
Costs and estimated earnings in excess of billings on contracts in
progress 47,055 --
Deferred revenue $(294,149) $(281,948)
$(247,094) $(281,948)
========= =========
</TABLE>
(4) PROPERTY AND EQUIPMENT
Property and equipment as of December 31, 1998 and 1999, consisted of the
following:
<TABLE>
<CAPTION>
1998 1999
---- ----
<S> <C> <C>
Office Equipment $ 28,079 95,248
Furniture and fixtures 10,932 $ 17,947
Less accumulated depreciation 39,011 113,195
9,743 27,495
Net property and equipment $ 29,268 $ 85,700
======== ========
</TABLE>
(5) CREDIT FACILITIES
In 1999, the Company secured a line of credit in the amount of $250,000
bearing interest at prime plus 1.5% (10.0% as of December 31, 1999). As of
December 31, 1999, $100,000 was outstanding under the line of credit. The line
of credit is secured by assets of the Company. All amounts outstanding under the
line of credit are fully payable upon demand by lender.
F-27
<PAGE> 173
(6) LEASE COMMITMENTS
The Company is obligated under noncancelable operating leases for office
space, that expire through 2001. Future minimum lease payments under
noncancelable operating leases as of December 31, 1999, are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
-----------------
<S> <C>
2000 $141,000
2001 139,000
-------
$280,000
========
</TABLE>
Rental expense for the operating leases was $123,000 and $125,000 for 1998
and 1999, respectively.
(7) 401(k) PLAN AND PROFIT SHARING PLAN
All eligible employees are covered by a defined contribution plan pursuant
to Section 401(k) of the Internal Revenue Code. The Company contributes a
matching contribution of 25% of the first 5% of employee contributions. Matching
contributions totaled $6,414 and $18,666 in 1998 and 1999, respectively.
The Company has a profit sharing plan covering all eligible employees.
Company contributions are made at the discretion of the Company. The Company
contributed $53,383 and $45,334 to the plan during the years ended December 31,
1998 and 1999, respectively.
(8) COMMON STOCK AND STOCK OPTION PLAN
(a) STOCK OPTION PLAN
In 1999, the Company adopted a stock plan (the Plan) pursuant to which the
Company's Board of Directors may grant stock options and stock purchase rights
to officers and employees. The 1999 Plan authorizes grants of options and rights
to purchase up to 1,850,000 shares of authorized but unissued common stock.
All options vest ratably and become fully exercisable after four years
from the date of grant and expire after ten years.
As of December 31, 1999, options for 633,000 shares had been granted under
the Plan with an exercise price of $0.001. No options have been exercised or
forfeited.
As of December 31, 1999, there were 1,217,000 shares available for grant
under the Plan.
(b) STOCK GRANTS AND PURCHASES
In January 1999, 1,250,000 shares of common stock were purchased by new
shareholders for a total consideration of $1,250. The fair value of these shares
totaled $32,500. The difference between the fair value and the consideration
received was recorded as compensation expense in 1999.
F-28
<PAGE> 174
In June 1999, 750,000 shares of common stock, valued at $825,000, were
given up by certain founding shareholders and reallocated to certain newer
shareholders. This reallocation was accounted for as a contribution to capital
by the founding shareholders and compensation expense to the receiving
shareholders.
(c) STOCK COMPENSATION
The Company uses the intrinsic-value method prescribed by APB Opinion No.
25 in accounting for its stock-based compensation arrangements for employees.
Compensation cost has been recognized for certain fixed stock options issuances
and stock grants in 1999 in the accompanying financial statements because the
fair value of the underlying common stock equals or exceeds the exercise price
of the stock options or the amount paid for the stock at the date of grant. No
compensation cost has been recognized for stock options granted at an exercise
price equal to the fair market value of the stock on the date of grant.
The Company has recorded deferred stock compensation expense of $1,601,490
for the difference at the grant date between the exercise price and the fair
value of the common stock underlying the stock options granted for the year
ended December 31, 1999. This deferred compensation expense is being amortized
on a straight-line basis over the vesting period of four years. Amortization of
deferred compensation of $106,818 was recognized for the year ended December 31,
1999.
The per share fair value of stock options granted during 1999 was $2.53,
on the date of grant using the Black-Scholes option-pricing model (excluding a
volatility assumption) with the following weighted-average assumptions: expected
dividend yield of 0%, risk-free interest rate of 6.33%, and an expected life of
four years.
Compensation expense associated with unrestricted stock grants of $857,500
was expensed at the time the stock was granted. The per share value of the stock
granted during 1999 ranged from $0.03 to $1.10.
Had compensation cost for the Company's stock-based compensation plan been
determined consistent with the fair value approach set forth in SFAS No. 123,
the compensation cost would be substantially the same as the compensation cost
determined under the intrinsic-value method.
(d) STOCK SPLITS
Share information for all periods have been retroactively adjusted to
reflect a 10-for-1 split of common stock effective in November 1999.
(9) BUSINESS AND CREDIT CONCENTRATION
Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist primarily of trade accounts receivable.
The Company has not experienced significant credit losses in the past.
No individual customer accounted for more than 10% in 1998 or 1999 of the
Company's total revenues. Three and two customers comprised 35% and 32% of
accounts receivable as of December 31, 1998 and 1999, respectively.
F-29
<PAGE> 175
(10) SUBSEQUENT EVENT
On March 16, 2000, the Company was acquired by Jupiter Communications
(Jupiter). The shareholders in the Company received 581,044 shares of Jupiter
common stock and options to purchase 61,456 shares of Jupiter common stock, in
exchange for all common stock and stock options outstanding. All options issued
by the Company were fully vested upon the acquisition.
F-30
<PAGE> 176
NET MARKET MAKERS
FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Net Market Makers:
We have audited the accompanying balance sheet of Net Market Makers (the
Company) as of December 31, 1999, and the related statements of operations,
shareholders' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Net Market Makers as of
December 31, 1999, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
/s/ KPMG LLP
March 27, 2000
F-31
<PAGE> 177
NET MARKET MAKERS
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1999 2000
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash ............................................... $ 463,418 $ 1,504,940
Accounts receivable ................................ 92,070 1,368,000
Prepaid expenses ................................... 119,841 39,825
Deferred tax asset ................................. 0 40,000
----------- -----------
Total current assets ..................... 675,329 2,952,765
Property and equipment, net ............................. 40,266 46,924
Other assets ............................................ 25,199 24,779
----------- -----------
Total assets ............................. $ 740,794 $ 3,024,468
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accrued payable and other liabilities .............. $ 38,217 $ 192,006
Accrued payroll .................................... 65,991 71,825
Accrued shareholder distributions .................. 282,791 282,791
Accrued income taxes ............................... 0 165,970
Deferred revenue ................................... 133,568 1,901,148
----------- -----------
Total current liabilities ................ 520,567 2,613,740
Commitments and contingencies
Shareholders' equity:
Common stock; $0.01 par value; 10,000,000 shares
authorized; 8,800,000 and 7,667,526 shares issued
and outstanding as of December 31, 1999 and
March 31, 2000, respectively...................... 88,000 76,675
Additional paid-in capital .............................. 4,462,378 2,363,734
Deferred compensation ................................... (3,654,084) 0
Shareholder loans ....................................... (120,656) (45,832)
Accumulated deficit ..................................... (555,411) (1,983,849)
----------- -----------
Total shareholders' equity ............... 220,227 410,728
----------- -----------
$ 740,794 $ 3,024,468
=========== ===========
</TABLE>
See accompanying notes to financial statements.
F-32
<PAGE> 178
NET MARKET MAKERS
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED MARCH 31,
DECEMBER 31, -------------------------------
1999 1999 2000
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Revenue:
Conference events ................................. $ 2,821,934 $ 0 $ 1,427,642
Other ............................................. 145,622 50,739 171,221
----------- ----------- -----------
Total revenue ........................... 2,967,556 50,739 1,598,863
----------- ----------- -----------
General and administrative expenses:
Personnel ......................................... 1,155,167 37,525 416,200
Conferences ....................................... 658,459 900 374,208
Stock-based compensation .......................... 745,916 0 1,618,939
Consultants ....................................... 269,281 204 173,728
Other ............................................. 248,796 12,804 327,660
----------- ----------- -----------
Total general and administrative expenses 3,077,619 51,433 2,910,735
----------- ----------- -----------
Operating loss .......................... (110,063) (694) (1,311,872)
Interest income ........................................ 9,511 13 7,304
----------- ----------- -----------
Net loss before taxes ................... (100,552) (681) (1,304,568)
Income tax expense ..................................... 10,000 0 123,870
----------- ----------- -----------
Net loss ................................ $ (110,552) $ (681) $(1,428,438)
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
F-33
<PAGE> 179
NET MARKET MAKERS
STATEMENTS OF SHAREHOLDERS' EQUITY
(FOR THE YEAR ENDED DECEMBER 31, 1999 AND
UNAUDITED THREE MONTHS ENDED MARCH 31, 2000)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
PARTNERS' --------------------------- PAID-IN
CAPITAL SHARES AMOUNT CAPITAL
-------- ---------- -------- -----------
<S> <C> <C> <C> <C>
Initial partners' contribution $ 30,659 0 $ 0 $ 0
Issuance of common stock
in exchange for partnership
capital contribution ....... (30,659) 7,100,000 71,000 (40,341)
Common stock purchased in
exchange for note receivable 0 1,700,000 17,000 4,502,719
Amortization of stock-based
compensation ............... 0 0 0 0
Interest on shareholder loan . 0 0 0 0
Net loss ..................... 0 0 0 0
Distributions to shareholders 0 0 0 0
-------- ---------- -------- -----------
Balance at December 31, 1999 . 0 8,800,000 88,000 4,462,378
Common stock returned in
exchange for reduction in
note receivable (unaudited) 0 (1,062,500) (10,625) (2,099,344)
Common stock returned for
no consideration ........... 0 (69,974) (700) 700
Amortization of stock-based
compensation (unaudited) ... 0 0 0 0
Net loss (unaudited) ......... 0 0 0 0
-------- ---------- -------- -----------
Balance as of March 31, 2000
(unaudited) ................ $ 0 7,667,526 $ 76,675 $ 2,363,734
======== ========== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
SHAREHOLDER TOTAL
DEFERRED NOTE ACCUMULATED SHAREHOLDERS'
COMPENSATION RECEIVABLES DEFICIT EQUITY
----------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Initial partners' contribution .. $ 0 $ 0 $ 0 $ 30,659
Issuance of common stock
in exchange for partnership
capital contribution .......... 0 0 0 0
Common stock purchased in
exchange for note receivable (4,400,000) (119,719) 0 0
Amortization of stock-based
compensation .................. 745,916 0 0 745,916
Interest on shareholder loan .... 0 (937) 0 (937)
Net loss ........................ 0 0 (110,552) (110,552)
Distributions to shareholders ... 0 0 (444,859) (444,859)
----------- --------- ----------- -----------
Balance at December 31, 1999 .... (3,654,084) (120,656) (555,411) 220,227
Common stock returned in
exchange for reduction in
note receivable (unaudited) ... 2,035,145 74,824 0 0
Common stock returned for
no consideration (unaudited)... 0 0 0 0
Amortization of stock-based
compensation (unaudited) ...... 1,618,939 0 0 1,618,939
Net loss (unaudited) ............ 0 0 (1,428,438) (1,428,438)
----------- --------- ----------- -----------
Balance as of March 31, 2000
(unaudited) ................... $ 0 $ (45,832) $(1,983,849) $ 410,728
=========== ========= =========== ===========
</TABLE>
See accompanying notes to financial statements.
F-34
<PAGE> 180
NET MARKET MAKERS
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED MARCH 31,
DECEMBER 31, ----------------------------
1999 1999 2000
--------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss .......................................................... $(110,552) $ (681) $(1,428,438)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation ................................................. 1,038 0 4,066
Interest on shareholder note receivable ...................... (937) 0 0
Stock compensation expense ................................... 745,916 0 1,618,939
Deferred income taxes ........................................ 0 0 125,970
Changes in operating assets and liabilities:
Prepaid expenses ......................................... (119,841) 0 80,016
Accounts receivable ...................................... (92,070) 0 (1,275,930)
Accrued liabilities ...................................... 38,217 0 153,789
Accrued payroll .......................................... 65,991 0 5,834
Deferred revenue ......................................... 133,568 24,230 1,767,580
--------- -------- -----------
Net cash provided by operating
activities ........................................ 661,330 23,549 1,051,826
--------- -------- -----------
Cash flows from investing activities:
Purchase of property and equipment ................................ (41,304) 0 (10,304)
Purchase of intangible assets ..................................... (25,199) 0 0
--------- -------- -----------
Net cash used in investing activities ................... (66,503) 0 (10,304)
--------- -------- -----------
Cash flows from financing activities:
Capital contribution .............................................. 30,659 789 0
Profit distributions to shareholders .............................. (162,068) 0 0
--------- -------- -----------
Net cash (used in) provided by
financing activities ................................ (131,409) 789 0
--------- -------- -----------
Net increase in cash ................................................... 463,418 24,338 1,041,522
Cash at beginning of year/period ....................................... 0 0 463,418
--------- -------- -----------
Cash at end of year/period.............................................. $ 463,418 $ 24,338 $ 1,504,940
========= ======== ===========
Supplemental disclosures of cash flow information:
Cash paid during year/period:
Income taxes ................................................. 0 0 0
========= ======== ===========
Interest ..................................................... 0 0 0
========= ======== ===========
Noncash financing and investing activities:
Accrued shareholder tax distribution ......................... 282,791 0 0
========= ======== ===========
Issuance (reduction) of shareholder note in
exchange for stock ........................................ 119,719 0 (73,812)
========= ======== ===========
</TABLE>
See accompanying notes to financial statements.
F-35
<PAGE> 181
NET MARKET MAKERS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000 IS UNAUDITED)
(1) SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
(a) DESCRIPTION OF BUSINESS
Net Market Makers (the Company) provides information, analysis, resources and
connections to the people who build and grow net markets, as well as to the
broader community of others who facilitate this growth. The Company holds
informational conferences, provides consulting services, and a monthly
newsletter and writes research reports to keep its clients oriented toward the
growth areas of business-to-business e-commerce.
The Company began as a sole proprietorship with two founders in 1998. In
January 1999, the Company became a partnership, at which point substantive
operations of the Company began, and the Company was incorporated in the state
of California on October 1, 1999 as a Subchapter S corporation. The Company
issued common stock in exchange for the net book value of the partnership on
November 1, 1999.
(b) UNAUDITED INTERIM FINANCIAL INFORMATION
The interim financial statements of the Company for the three months ended
March 31, 1999 and 2000, included herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission (SEC). Certain information and note disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted pursuant to such rules and regulations relating to interim
financial statements.
In the opinion of management, the accompanying unaudited interim financial
statements reflect all adjustments consisting only of normal recurring
adjustments necessary to present fairly the financial position of the Company as
of March 31, 2000, and the results of its operations and cash flows for the
three months ended March 31, 1999 and 2000.
(c) USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
(d) COMPREHENSIVE INCOME (LOSS)
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
130, Reporting Comprehensive Income, which establishes standards for reporting
and display of comprehensive income and its components. During the period
presented, the Company did not have any other comprehensive income or loss items
and, accordingly, comprehensive loss is equivalent to net loss for the period
presented.
F-36
<PAGE> 182
(e) SEGMENTS OF AN ENTERPRISE AND CONCENTRATIONS OF MARKET, CREDIT AND
SUPPLIERS' RISK
In June 1997, the Financial Accounting Standards Board (FASB) issued SFAS No.
131, Disclosures About Segments of an Enterprise and Related Information, which
is effective for fiscal years beginning after December 15, 1997. SFAS No. 131
establishes revised standards for the reporting of financial and descriptive
information about operating segments in financial statements. The Company
adopted this statement effective January 1, 1999. The chief decision maker of
the Company makes decisions and reviews operating results on a combined basis
for all product lines and no other discrete financial information is available.
Accordingly, the Company has determined that it operates only in one segment.
The Company relies heavily on revenues from user conferences. During 1999,
the Company held two such conferences. Financial instruments, which potentially
subject the Company to concentrations of credit risk, consist of accounts
receivable, which are comprised primarily of amounts due for newsletter
subscriptions. The Company controls this risk by monitoring the age and
collection of its receivables.
(f) FAIR VALUE OF FINANCIAL INSTRUMENTS
Prepaid expenses, other assets, accrued liabilities and accrued payroll are
considered to have carrying amounts that approximate fair value because of the
short maturity of these financial instruments.
(g) PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and are depreciated on a
straight-line basis over their estimated useful lives of three years for
computer equipment and software, and seven years for office furniture and
fixtures. Leasehold improvements are amortized on a straight-line basis over the
shorter of the lease term or their estimated useful lives.
(h) IMPAIRMENT OF LONG-LIVED ASSETS
In accordance with SFAS No. 121, Impairment of Long-Lived Assets and
Long-Lived Assets to Be Disposed Of, the Company reviews, as circumstances
dictate, the carrying amount of its long-lived assets. The purpose of these
reviews is to determine whether the carrying amounts are recoverable.
Recoverability is determined by comparing the projected undiscounted net cash
flows of the long-lived assets against their respective carrying amounts. The
amount of impairment, if any, is measured based on the excess of the carrying
value over the fair value of the asset. Assets to be disposed of are reported at
the lower of the carrying amount or fair value less costs to sell. The Company
estimates fair value based on the best information available, making judgments
and projections as considered necessary.
(i) REVENUE RECOGNITION
Revenue from conference events is recognized when the events have taken
place. Revenues from subscriptions are recognized over the subscription period.
Revenue from other consulting services is recognized as services are performed.
(j) INCOME TAXES
Prior to January 1, 2000, the Company's shareholders had elected S
corporation status for federal income tax purpose. As a result, there was no
provision for federal income tax expense. State franchise tax was assessed at
the rate of 1.5% at the corporate level.
As of January 1, 2000, the Company terminated its S corporation status and
will file federal tax returns as a C Corporation from that date.
F-37
<PAGE> 183
(2) PROPERTY AND EQUIPMENT
Property and equipment consisted of the following as of December 31, 1999:
<TABLE>
<S> <C>
Office furniture and fixtures ... $ 8,626
Computer equipment .............. 30,641
Software ........................ 2,037
--------
41,304
Less accumulated depreciation and (1,038)
--------
amortization
$ 40,266
========
</TABLE>
Depreciation expense on property and equipment was approximately $1,000 for
the year ended December 31, 1999.
(3) SHAREHOLDERS' EQUITY
Common Stock
The Company issued 7,100,000 shares of common stock on November 1, 1999, in
exchange for the capital contributions represented by the accounts of the Net
Market Makers Partnership of $30,659.
On November 8, 1999, the Company executed a common stock purchase agreement,
whereby an executive of the Company purchased 1,700,000 shares of common stock
for $0.07 per share. The common stock was issued in exchange for a promissory
note in the amount of $119,719 with an interest rate of 5.42%. The stock vests
at a rate of 212,500 shares per quarter commencing with the quarter ending March
31, 2000. In the event of a change in ownership of more than 50% of the Company,
the lesser of an additional 850,000 shares or the remaining unvested portion,
vests immediately (see Note 5). The stock purchased was valued at $2.56 per
share, which was the estimated market value of the Company's stock on that date,
resulting in compensation of $4,400,000 to be amortized over the vesting period
consistent with the method described in FASB Interpretation No. 28, Accounting
for Stock Appreciation Rights and Other Variable Stock Option or Award Plans.
For the year ended December 31, 1999, compensation expense of $745,916 was
recorded in the Company's statement of operations. The principal and accrued
interest on the note shall be payable as follows: $59,860, plus interest, due on
November 8, 2000, and $59,860, plus interest, due on November 8, 2001.
Effective February 24, 2000, this common stock purchase agreement was amended
and 1,062,500 shares were contributed back to the capital of the Company in
exchange for immediate vesting of the remaining 637,500 shares. In addition, the
related promissory note for $119,719 was canceled and replaced with a promissory
note for $44,895.
Effective February 24, 2000, 69,974 shares of the Company's common stock,
originally issued on November 1, 1999, were contributed back to the capital of
the Company.
(4) COMMITMENTS
The Company leases office space and equipment under noncancelable operating
leases expiring at various dates through 2002. The leases contain various
renewal options. Minimum lease payments under these noncancelable operating
leases are as follows as of December 31, 1999:
F-38
<PAGE> 184
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
<S> <C>
2000 $33,239
2001 2,793
2002 and thereafter 2,796
-------
$38,828
=======
</TABLE>
Rent expense under noncancelable operating leases was $26,631 for the year
ended December 31, 1999.
(5) SUBSEQUENT EVENTS
Acquisition by Jupiter Communications, Inc. (Unaudited)
In April 2000, all outstanding shares of the Company's common stock were
acquired by Jupiter Communication, Inc. (Jupiter) for $20,500,000 and 274,680
shares of Jupiter's common stock valued at $8,721,090. Additional consideration
of up to $10,500,000 in cash is payable by Jupiter if certain revenue targets
are met by the Company during 2000 and 2001.
F-39
<PAGE> 185
ADRELEVANCE, INC.
FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
AdRelevance, Inc.
We have audited the accompanying balance sheet of AdRelevance, Inc. (a
development stage company) (the Company) as of December 31, 1998, and the
related statements of operations, shareholders' equity (deficit), and cash flows
for the period from October 12, 1998 (inception) to December 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of AdRelevance, Inc. (a
development stage company) at December 31, 1998, and the results of its
operations and its cash flows for the period from October 12, 1998 (inception)
to December 31, 1998, in conformity with generally accepted accounting
principles.
As discussed in Note 1 to the financial statements, the Company's recurring
net losses and negative cash flows from operations raise substantial doubt about
its ability to continue as a going concern. Management's plans as to these
matters are also described in Note 1. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ Ernst & Young LLP
Seattle, Washington
October 5, 1999,
except for paragraphs 3 and 4 of Note 8,
as to which the date is October 8, 1999.
F-40
<PAGE> 186
ADRELEVANCE, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
--------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ........................ $ 67,507 $ 1,360,752
Accounts receivable .............................. -- 10,000
Prepaid expenses and other ....................... 2,650 140,049
--------- -----------
Total current assets ............................... 70,157 1,510,801
Property and equipment ............................. 11,369 289,488
Deferred charges and other assets .................. 21,030 42,009
========= ===========
Total assets ....................................... $ 102,556 $ 1,842,298
========= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses ............ $ 65,378 $ 336,835
Advance billings to clients ...................... -- 6,667
Line of credit ................................... -- 250,000
Current portion of capital lease obligations ..... -- 31,996
Convertible note payable ......................... 100,000 --
Note payable ..................................... -- 2,000,000
--------- -----------
Total current liabilities .......................... 165,378 2,625,498
Capital lease obligations, less current portion .... -- 59,454
Shareholders' equity (deficit):
Series A preferred stock, $.0001 par value:
Authorized shares - 860,000
Issued and outstanding shares - 798,607
Liquidation preference - $1,724,991 ............. -- 1,103,236
Common stock, $.0001 par value:
Authorized shares - 6,000,000
Issued and outstanding shares - 1,780,000 in 1998
and 1,793,333 in 1999 .......................... 2,320 3,989,688
Deferred stock-based compensation ................ -- (3,050,569)
Accumulated deficit during development stage ..... (65,142) (2,885,009)
--------- -----------
Total shareholders' equity (deficit) ............... (62,822) 842,654
--------- -----------
Total liabilities and shareholders' equity (deficit) $ 102,556 $ 1,842,298
========= ===========
</TABLE>
See accompanying notes.
F-41
<PAGE> 187
ADRELEVANCE, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
OCTOBER 12, 1998 NINE MONTHS
(INCEPTION) TO ENDED
DECEMBER 31, 1998 SEPTEMBER 30, 1999
-------- ---------
(UNAUDITED)
<S> <C> <C>
Revenues $ -- $ 3,333
Operating expenses:
Sales and marketing ...... 3,823 224,184
General and administrative 46,379 855,855
Research and development . 14,709 817,784
Stock-based compensation . -- 921,285
-------- ---------
Total operating expenses .... 64,911 2,819,108
-------- ---------
Loss from operations......... (64,911) (2,815,775)
Interest expense, net ....... 231 4,092
-------- ---------
Net loss .................... $(65,142) $(2,819,867
======== =========
</TABLE>
See accompanying notes.
F-42
<PAGE> 188
ADRELEVANCE, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
SERIES A DEFERRED
PREFERRED STOCK COMMON STOCK STOCK-BASED ACCUMULATED
SHARES AMOUNT SHARES.. AMOUNT COMPENSATION DEFICIT TOTAL
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock in exchange for
cash ($320) and assets ($2,000) .......... -- $ -- 1,780,000 $ 2,320 $ -- $ -- $ 2,320
Net loss .................................... -- -- -- -- -- (65,142) (65,142)
-----------------------------------------------------------------------------------
Balance at December 31, 1998 ................... -- -- 1,780,000 2,320 -- (65,142) (62,822)
Issuance of preferred stock, net of issuance
cost of $29,528 (unaudited) .............. 798,607 1,103,236 -- -- -- -- 1,103,236
Nonemployee stock-based compensation
(unaudited) .............................. -- -- -- 296,361 -- -- 296,361
Fair value of warrants issued in connection
with borrowing arrangements (unaudited) .. -- -- -- 13,514 -- -- 13,514
Deferred stock-based compensation (unaudited) -- -- -- 3,675,493 3,675,493 -- --
Amortization of stock-based compensation
(unaudited) .............................. -- -- -- -- 624,924 -- 624,924
Exercise of stock options ................... -- -- 13,333 2,000 -- -- 2,000
Net loss (unaudited) ........................ -- -- -- -- -- (2,819,867) (2,819,867)
----------------------------------------------------------------------------------
Balance at June 30, 1999 (unaudited) ........... 798,607 $1,103,236 1,793,333 $ 3,989,688 $(3,050,569) $(2,885,009) $ (842,654)
==================================================================================
</TABLE>
See accompanying notes.
F-43
<PAGE> 189
ADRELEVANCE, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
OCTOBER 12, 1998
(INCEPTION) TO NINE MONTHS
DECEMBER 31, ENDED
1998 SEPTEMBER 30, 1999
-------------- ------------------
(UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES
Net loss .............................................. $ (65,142) $(2,819,867)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization .................... 61 41,109
Noncash stock-based compensation ................. 600 922,550
Changes in operating assets and liabilities:
Advance billings to clients....................... -- 6,667
Prepaid expenses ............................... (2,650) (137,399)
Accounts payable and accrued expenses .......... 65,378 271,457
Accounts receivable............................. -- (10,000)
Deferred charges and other assets .............. (21,030) (8,730)
-------------- ------------------
Net cash used in operating activities ................. (22,783) (1,734,213)
INVESTING ACTIVITIES
Purchases of property and equipment ................... (10,030) (213,413)
FINANCING ACTIVITIES
Proceeds from issuance of convertible note payable .... 100,000 --
Proceeds from note payable............................. -- 2,000,000
Proceeds from issuance of common stock ................ 320 --
Net proceeds from issuance of Series A preferred stock -- 1,003,236
Proceeds from exercise of common stock................. -- 2,000
Principal payments on capital lease obligations ....... -- (14,365)
-------------- ------------------
Net cash provided by financing activities ............. 100,320 3,240,871
-------------- ------------------
Increase in cash and cash equivalents ................. 67,507 1,293,245
Cash and cash equivalents at beginning of period ...... -- 67,507
-------------- ------------------
Cash and cash equivalents at end of period ............ $ 67,507 $ 1,360,752
============== ==================
SUPPLEMENTAL CASH FLOW INFORMATION
Issuance of common stock in exchange
for computer equipment and services ................ $ 2,000 $ 13,514
Conversion of note payable into shares of
Series A preferred stock ........................... -- 100,000
Furniture and equipment acquired through
capital lease obligations .......................... -- 105,815
</TABLE>
See accompanying notes.
F-44
<PAGE> 190
NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF SEPTEMBER 30, 1999 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1999 IS UNAUDITED)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS AND GOING CONCERN
AdRelevance, Inc. (the "Company"), incorporated in the State of Washington
on October 12, 1998, is engaged in the development of a proprietary, real-time,
competitive advertising service for the Word Wide Web. The Company has developed
an intelligent agent technology that gathers and classifies online advertising
and allows clients to create customized analytical reports regarding advertising
found on the World Wide Web. The Company completed the commercial launch of its
product on September 7, 1999.
The Company has incurred operating losses since its inception and has limited
working capital. The Company has financed its operations to date through the
issuance of equity securities and bank borrowings. Further development and
establishment of the Company's business will require additional equity
financing. The Company believes that equity financing can be obtained from
existing or new investors. However, there can be no assurance that the Company
will be able to obtain such equity financing on acceptable terms, if at all.
These factors, among others, raise substantial doubt about the Company's ability
to continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
INTERIM FINANCIAL STATEMENTS
The accompanying balance sheet as of September 30, 1999 and the statements
of operations and cash flows for the nine months ended September 30, 1999, are
unaudited. In the opinion of management, the unaudited financial statements have
been prepared on the same basis as the audited financial statements and include
all adjustments, consisting of normal recurring adjustments, necessary for a
fair presentation of the results of operations and cash flows for the interim
periods. Operating results for the nine months ended September 30, 1999 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1999.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements. Actual results could
differ from those estimates.
CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of three
months or less at the date of purchase to be cash equivalents.
CONCENTRATION OF CREDIT RISK
The Company is subject to concentration of credit risk from its cash
investments. The Company's credit risk is managed through monitoring the
stability of the financial institutions utilized and diversification of its
financial resources.
F-45
<PAGE> 191
Financial instruments consist of cash and cash equivalents and capital lease
obligations. The fair value of all financial instruments approximate the
carrying amount based on the current rate offered for similar instruments.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation.
Depreciation is provided using the straight-line method over the estimated
useful lives of the related assets, which range from two to five years.
Leasehold improvements are amortized over the shorter of the lease term or
estimated useful life.
INCOME TAXES
The Company accounts for income taxes under the liability method. Under the
liability method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to be recovered. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amounts
expected to be realized.
REVENUE RECOGNITION
Products and services are sold on a subscription basis and the related
revenues are recognized over the term of the products and services. Customers
are typically billed in advance for the next three months. Billings rendered in
advance of products and services are recorded as "Advance Billings to Clients"
in the accompanying balance sheet.
STOCK-BASED COMPENSATION
The Company has elected to follow Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employee (APB No. 25), and related
interpretations, in accounting for employee stock options rather than the
alternative fair value accounting allowed by Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based Compensation (SFAS
No. 123). APB No. 25 provides that the compensation expense relative to the
Company's employee stock options is measured based on the intrinsic value of
the stock option. SFAS No. 123 requires companies that continue to follow
APB No. 25 to provide a pro forma disclosure of the impact of applying the
fair value method of SFAS No. 123 (see Note 6). The Company accounts for
stock issued to nonemployees in accordance with the provisions of SFAS No.
123 and the Emerging Issues Task Force consensus in Issue No. 96-18,
Accounting for Equity Instruments that Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services.
NEW ACCOUNTING PRONOUNCEMENTS
In March 1998, the Accounting Standards Executive Committee issued Statement
of Position (SOP) 98-1, Accounting for the Costs of Computer Software Developed
or Obtained for Internal Use. SOP 98-1 requires all costs related to the
development of internal use software, other than those incurred during the
application development stage, to be expenses as incurred. Costs incurred during
the application development stage are required to be capitalized and amortized
over the estimated useful life of the software. The Company does not expect that
the adoption of SOP 98-1 will have a material impact on its financial statements
because it has not currently developed software for internal use.
F-46
<PAGE> 192
2. PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December 31, 1998:
<TABLE>
<S> <C>
Computers and equipment............................. $10,789
Furniture and fixtures.............................. 641
-------
11,430
Accumulated depreciation............................ (61)
-------
$11,369
=======
</TABLE>
3. LEASES
The Company leases office space under an operating lease which calls for
fixed rental payments through December 31, 1999. Total rent expense under this
operating lease for the periods ended December 31, 1998 and September 30, 1999
was $1,574 and $35,911, respectively. Future minimum lease payments under this
agreement are $37,600 for 1999.
In July 1999, the Company entered into an agreement to sublease new office
space for the period September 1, 1999 through February 28, 2001. The agreement
requires total payments of approximately $300,000.
4. DEBT
In December 1998, the Company borrowed $100,000 under an unsecured 4.33%
convertible note payable. The note was converted into 69,444 shares of Series A
preferred stock in January 1999 in accordance with the note agreement.
In February 1999, the Company obtained a $100,000 equipment capital lease
line of credit and issued 3,695 Series A warrants at an exercise price of $1.44
per share. The warrants expire after the earlier of seven years after issuance
or three years after the completion of an initial public offering. The value of
the warrants of $5,150 is being amortized over the life of the lease. Under this
36-month agreement, the Company has signed capital leases for various furniture
and equipment.
In March 1999, the Company entered into a financing arrangement with a bank
which provided for a $250,000 line of credit for operating needs. Borrowings
under the line of credit bear interest at the bank's prime rate plus 0.25% and
are collateralized by substantially all nonleased assets of the Company,
including intellectual property. In connection with the establishment of the
line of credit, the Company issued 5,208 Series A warrants at an exercise price
of $1.44 per share. The warrants expire at the earlier of seven years or three
years after the completion of an initial public offering. The value of the
warrants of $8,364 is being amortized over the life of the agreement.
In August 1999, the Company signed a $2 million promissory note with a
company with a maturity date of January 26, 2001. The note carries an interest
rate of 7% and is collateralized by substantially all nonleased assets of the
Company, including intellectual property. Principal and interest on the
promissory note is due and payable commencing on the earlier of the
twelve-month anniversary of the issuance date, payable in six equal monthly
installments, or upon change of ownership of the Company.
5. INCOME TAXES
At December 31, 1998, the Company had net operating loss carryforwards and
research and development credit carryforwards of $52,104 and $673, respectively.
These carryforwards expire in 2018. Deferred tax assets reflect the tax effects
of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes.
Since the Company's utilization of these deferred tax assets is dependent on
future profits which are not assured, a valuation allowance equal to the
deferred tax assets has been provided. Significant components of deferred tax
assets as of December 31, 1998 are as follows:
F-47
<PAGE> 193
<TABLE>
<S> <C>
Deferred tax assets:
Net operating loss carryforward..................... $17,715
Research and development credit carryforward........ 673
Other temporary differences......................... 4,307
-------
Total gross deferred tax assets....................... 22,695
Less valuation allowance.............................. (22,695)
-------
Net deferred tax asset................................ $ --
=======
</TABLE>
6. SHAREHOLDERS' EQUITY
PREFERRED STOCK
During January and February 1999, the Company sold 798,607 shares of Series A
preferred stock (Series A) in exchange for gross proceeds of $1,149,994. Each
share of Series A is convertible into one share of common stock. Automatic
conversion shall occur upon consummation of an initial public offering at a
price of not less than $5.76 per share and for a total offering of not less than
$15 million net proceeds, or the date specified by written consent or agreement
of the holders of a majority of the outstanding shares of Series A stock.
The holders of Series A will be entitled to receive noncumulative dividends
at the rate of $0.115 per share per annum, if and when declared by the Board of
Directors. The holders of Series A stock shall be entitled to participate pro
rata in any dividends paid on the common stock on an as-if-converted basis. In
the event of any liquidation, dissolution, or winding up of the Company, the
holders of Series A shall be entitled to receive, in preference to holders of
common stock, an amount equal to $2.16 per share plus declared but unpaid
dividends if any. Thereafter, all remaining assets shall be distributed among
the holders of Series A and common stock on a pro rata basis (assuming
conversion of all Series A into common stock) until the holders of the Series A
have received an aggregate of $5.76 per share. The holder of each share of
Series A stock shall have the right to the number of votes equal to that number
of shares of common stock issuable upon conversion.
The Company is prohibited from taking certain corporate actions without the
approval of the holders of the majority of outstanding Series A shares. In
conjunction with the sale of Series A, the Company, its founders, and the Series
A investors also entered into an Investors Rights Agreement, Right of First
Refusal and Co-sale Agreement, and a Voting Agreement.
COMMON STOCK
In conjunction with the sale of Series A preferred stock, the Company's
founders and other shareholders granted the Company a right to repurchase
1,720,000 shares of common stock held by them at the original purchase price of
$0.001 per share if their employment or consulting arrangement terminates under
certain circumstances. The Company's right of repurchase lapses at a variety of
rates beginning in October 1998. At December 31, 1998, 1,079,309 (788,102 at
September 30, 1999) shares held by these shareholders were subject to repurchase
under these agreements. The restricted stock agreements provide for adjusted
repurchase lapsing schedules in the event of a change of control.
STOCK OPTION PLANS
Under the terms of the 1998 and 1999 Stock Option Plans, the Board of
Directors may grant incentive and nonqualified stock options to employees,
officers, directors, and consultants of the Company. An aggregate of 993,333
shares of common stock were reserved for future issuance. The Company generally
grants stock options with exercise prices equal to the fair market value of
common
F-48
<PAGE> 194
stock on the date of grant as determined by the Board of Directors. Options
generally vest over a three- or four-year period or by specific terms of the
option agreement.
A summary of stock option activity follows:
<TABLE>
<CAPTION>
OUTSTANDING OPTIONS
-------------------------------
SHARES NUMBER WEIGHTED-AVERAGE
AVAILABLE OF EXERCISE
FOR GRANT SHARES PRICE
------------------------------------------------
<S> <C> <C> <C>
1998 Stock Option Plan introduction............. 400,000 -- $ --
Options granted................................. (180,000) 180,000 $ 0.10
-----------------------
Outstanding at December 31, 1998................... 220,000 180,000 $ 0.10
Reduction of shares available under
the 1998 Stock Option Plan.................... (100,000) -- $ --
1999 Stock Option Plan introduction............. 693,333 -- $ --
Options granted................................. (656,458) 656,458 $ 1.23
Options exercised............................... -- (13,333) 1.02
-----------------------
Outstanding at September 30, 1999.................. 156,875 823,125 $ 0.15
======================
</TABLE>
The following table summarizes information regarding stock options
outstanding and exercisable as of December 31, 1998:
<TABLE>
<CAPTION>
OUTSTANDING OPTIONS
--------------------------------------------- EXERCISABLE
NUMBER WEIGHTED-AVERAGE NUMBER
EXERCISE PRICE OF REMAINING CONTRACTUAL LIFE OF
SHARES SHARES
---------------------------------------------------------------------------------
<S> <C> <C> <C>
$0.10 180,000 2.94 years 0
</TABLE>
Under APB No. 25, no compensation expense is recognized when the exercise
price of the Company's employee stock options equals the fair value of the
underlying stock on the date of grant. Deferred stock-based compensation is
recorded for those situations where the exercise price of a stock option was
lower than the deemed fair value for financial reporting purposes of the
underlying common stock. The Company recorded aggregate deferred stock-based
compensation of $3,675,493 in the nine months ended September 30, 1999. The
deferred stock-based compensation is being amortized over the vesting period of
the underlying options. Total amortization of stock-based compensation
recognized was $624,924 in the nine months ended September 30, 1999.
Had the stock-based compensation for the Company's Stock Option Plans been
determined based on the minimum value model using the multiple-option approach,
the Company's net loss would have been increased by $37 for the period ended
December 31, 1998. The fair value at each option grant is estimated on the date
of grant using the minimum option pricing model, assuming no expected dividends,
average risk-free interest rate of 5.0%, and average expected life of three
years. Compensation expense recognized in providing pro forma disclosures may
not be representative of the effects on pro forma earnings for future years
because the amounts above include only the amortization of the fair value of
1998 grants.
In 1999, the Company issued options to consultants to acquire 79,500 shares
of common stock at an exercise price of $0.15 per share. The value of the
options will be recognized over the related service
F-49
<PAGE> 195
period with final valuation at the completion of the service period. Through
September 30, 1999, the Company had recognized stock-based compensation expense
of $296,361 related to these stock options.
COMMON STOCK RESERVED FOR FUTURE ISSUANCE
The following shares of common stock were reserved at December 31, 1998:
<TABLE>
<S> <C>
1998 Stock Option Plan................................ 400,000
Series A preferred stock.............................. 860,000
---------
1,260,000
=========
</TABLE>
7. YEAR 2000 DISCLOSURE (UNAUDITED)
The Company recognizes the need to ensure that its operations will not be
adversely impacted by Year 2000 software failures. The Year 2000 (Y2K) problem
is the result of computer programs being written using two digits (rather than
four) to define the applicable year. Programs that have time-sensitive software
may recognize a date using "00" as 1900 rather than 2000, which could result in
miscalculations or system failures. The Company is currently working to address
the potential impact of the Y2K problem. The Company's processes for evaluating
and managing the risks and costs associated with this potential problem are
being managed by internal staff members.
The Company has, to date, determined that significant modification is not
required for its financial reporting and other information technology to be
ready for the year 2000. The Company has not yet determined the impact that a
Y2K failure suffered by vendors, customers, suppliers, or other third-party
service providers would have on the Company, but believes that such a failure
could have a material adverse impact. The Company will continue to evaluate the
status of its Y2K compliance to determine whether a contingency plan for dealing
with such failures is necessary, but no such plan has yet been adopted by the
Company. The Company has not yet determined what the nature and timing of any
such contingency plan would be. As of December 31, 1998, the Company has not
incurred any incremental expenses in relation to the Y2K issue because the
technology platforms designed since inception were implemented to support Y2K
compliance.
Based on the information the Company has developed to date, the Company
estimates that costs of addressing potential problems will not have a material
adverse impact on its operations.
8. SUBSEQUENT EVENTS
F-50
<PAGE> 196
STOCK TRANSFER
On October 8, 1999, the Company issued to a consultant 100,000 shares of
common stock as additional compensation for past consulting services. A founder
of the Company contributed 100,000 shares of stock to the Company to facilitate
this stock issuance. The estimated fair value of these shares is $19.34 per
share and in accordance with SEC Staff Accounting Bulletin No. 79, stock-based
compensation expense will be recognized in October 1999 for the value of these
services.
ACQUISITION OF THE COMPANY
On October 8, 1999, the Company entered into an agreement whereby all of the
outstanding stock of the Company was acquired by Media Metrix, Inc. for a
purchase price of approximately $59.4 million and an additional amount which is
contingent upon the Company achieving certain milestones.
F-51
<PAGE> 197
ANNEX A
AGREEMENT AND PLAN OF MERGER
AMONG
MEDIA METRIX, INC.,
MMX ACQUISITION CORP.
AND
JUPITER COMMUNICATIONS, INC.
DATED AS OF JUNE 26, 2000
A-1
<PAGE> 198
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I THE MERGER....................................... A-8
Section 1.1. The Merger.................................. A-8
Section 1.2. Closing..................................... A-8
Section 1.3. Effective Time.............................. A-8
Section 1.4. Effects of the Merger....................... A-8
Section 1.5. Certificate of Incorporation and Bylaws..... A-8
Section 1.6. Directors; Officers......................... A-9
ARTICLE II EFFECT OF THE MERGER ON THE STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF
CERTIFICATES.................................... A-9
Section 2.1. Conversion of Securities.................... A-9
Section 2.2. Fractional Shares........................... A-9
Section 2.3. Exchange of Certificates.................... A-10
Section 2.4. Stock Transfer Books........................ A-11
Section 2.5. Treatment of Jupiter Stock Options.......... A-11
Section 2.6. Investment of Exchange Fund................. A-12
Section 2.7. Appraisal Rights............................ A-12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF JUPITER...... A-12
Section 3.1. Organization, Qualification, Etc............ A-12
Section 3.2. Capital Stock............................... A-13
Section 3.3. Corporate Authority; No Violation........... A-14
Section 3.4. Reports and Financial Statements............ A-15
Section 3.5. No Undisclosed Liabilities.................. A-15
Section 3.6. Compliance with Laws........................ A-15
Section 3.7. Employee Benefit Plans...................... A-16
Section 3.8. Absence of Certain Changes or Events........ A-17
Section 3.9. Litigation.................................. A-17
Section 3.10. Title to Assets............................. A-18
Section 3.11. Intellectual Property....................... A-18
Section 3.12. Material Contracts.......................... A-19
Section 3.13. Labor Matters............................... A-19
Section 3.14. Tax Matters................................. A-20
Section 3.15. Customers................................... A-20
Section 3.16. Opinion of Financial Advisor................ A-20
Section 3.17. Takeover Laws............................... A-20
Section 3.18. Required Vote of Jupiter Stockholders....... A-21
Section 3.19. Finders or Brokers.......................... A-21
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF MEDIA METRIX
AND MERGER SUB.................................. A-21
Section 4.1. Organization, Qualification, Etc............ A-21
Section 4.2. Capital Stock............................... A-22
</TABLE>
A-2
<PAGE> 199
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 4.3. Corporate Authority; No Violation........... A-22
Section 4.4. Reports and Financial Statements............ A-23
Section 4.5. No Undisclosed Liabilities.................. A-23
Section 4.6. Compliance with Laws........................ A-24
Section 4.7. Employee Benefit Plan....................... A-24
Section 4.8. Absence of Certain Changes or Events........ A-25
Section 4.9. Litigation.................................. A-26
Section 4.10. Title to Assets............................. A-26
Section 4.11. Intellectual Property....................... A-26
Section 4.12. Material Contracts.......................... A-27
Section 4.13. Labor Matters............................... A-27
Section 4.14. Tax Matters................................. A-27
Section 4.15. Customers................................... A-28
Section 4.16. Opinion of Financial Advisor................ A-28
Section 4.17. Takeover Laws............................... A-28
Section 4.18. Required Vote of Media Metrix
Stockholders........................................... A-28
Section 4.19. Finders or Brokers.......................... A-28
ARTICLE V COVENANTS AND AGREEMENTS......................... A-29
Section 5.1. Conduct of Business by Jupiter and Media
Metrix................................................. A-29
Section 5.2. Investigation............................... A-31
Section 5.3. Stockholder Approval; Filings............... A-31
Section 5.4. Additional Reports.......................... A-33
Section 5.5. Consents; Approvals......................... A-33
Section 5.6. Takeover Statute............................ A-33
Section 5.7. No Solicitation............................. A-33
Section 5.8. Public Announcements........................ A-35
Section 5.9. Indemnification and Insurance............... A-35
Section 5.10. Notification of Certain Matters............. A-36
Section 5.11. Board of Directors and Officers of Media
Metrix................................................. A-36
Section 5.12. Employee Plans and Benefit Arrangements..... A-36
Section 5.13. Section 16b Approvals....................... A-37
Section 5.14. Bylaw Amendment............................. A-37
ARTICLE VI CONDITIONS TO THE MERGER........................ A-37
Section 6.1. Conditions to Each Party's Obligation to
Effect the Merger...................................... A-37
Section 6.2. Conditions to Obligations of Jupiter to
Effect the Merger...................................... A-38
Section 6.3. Conditions to Obligations of Media Metrix to
Effect the Merger...................................... A-38
ARTICLE VII TERMINATION, WAIVER, AMENDMENT AND CLOSING..... A-39
Section 7.1. Termination or Abandonment.................. A-39
Section 7.2. Effect of Termination....................... A-40
Section 7.3. Termination Fee Payments.................... A-40
</TABLE>
A-3
<PAGE> 200
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE VIII MISCELLANEOUS................................. A-41
Section 8.1. No Survival of Representations and
Warranties............................................. A-42
Section 8.2. Expenses.................................... A-42
Section 8.3. Counterparts; Effectiveness................. A-42
Section 8.4. Governing Law............................... A-42
Section 8.5. Notices..................................... A-42
Section 8.6. Assignment; Binding Effect.................. A-43
Section 8.7. Severability................................ A-43
Section 8.8. Enforcement of Agreement.................... A-43
Section 8.9. Miscellaneous............................... A-43
Section 8.10. Interpretation; Definitions................. A-43
EXHIBIT A Form of Certificate of Incorporation of Surviving
Corporation
</TABLE>
A-4
<PAGE> 201
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
TERM SECTION
---- -----------
<S> <C>
affiliate................................................... 8.10
Agreement................................................... Preamble
Certificate of Merger....................................... 1.3
Closing..................................................... 1.2
Closing Date................................................ 1.2
Code........................................................ Recitals
company..................................................... 5.7(a)
Competing Transaction....................................... 5.7(a)
Confidentiality Agreement................................... 5.2
Contract.................................................... 3.3(b)
Decrees..................................................... 3.6(b)
Delaware Secretary of State................................. 1.3
DGCL........................................................ 1.1
Effective Time.............................................. 1.3
Employee.................................................... 3.7(a)
Encumbrances................................................ 3.1(b)
ERISA....................................................... 3.7(d)
Exchange Act................................................ 3.3(c)
Exchange Agent.............................................. 2.3(a)
Exchange Fund............................................... 2.3(a)
Exchange Ratio.............................................. 2.1(c)
GAAP........................................................ 3.4
Governmental Entity......................................... 3.3(c)
HSR Act..................................................... 3.3(c)
Indemnified Parties......................................... 5.9(a)
Intellectual Property Rights................................ 3.11(k)
Joint Proxy Statement....................................... 5.3(b)
Jupiter..................................................... Preamble
Jupiter Affiliated Group.................................... 5.13(b)
Jupiter Board Recommendation................................ 3.3(a)
Jupiter Business Combination................................ 7.3(d)
Jupiter Compensation and Benefit Plans...................... 3.7(a)
Jupiter Contract............................................ 3.3(b)
Jupiter Designees........................................... 5.11
Jupiter Disclosure Letter................................... Article III
Jupiter ERISA Affiliate..................................... 3.7(f)
Jupiter ESPP................................................ 2.5(c)
Jupiter Intellectual Property............................... 3.11(k)
Jupiter Intellectual Property Licenses...................... 3.11(b)
Jupiter Meeting............................................. 5.3(a)
Jupiter Option.............................................. 2.5(a)
Jupiter Pension Plan........................................ 3.7(d)
Jupiter Plans............................................... 2.5(a)
Jupiter Preferred Stock..................................... 3.2(a)
Jupiter SEC Reports......................................... 3.4
Jupiter Shares.............................................. 2.1(a)
</TABLE>
A-5
<PAGE> 202
<TABLE>
<CAPTION>
TERM SECTION
---- -----------
<S> <C>
Jupiter Stock Certificate................................... 2.1(d)
Jupiter Termination Fee..................................... 7.3(a)
Jupiter Triggering Event.................................... 7.3(a)
Jupiter's 1999 Form 10-K.................................... 3.1(a)
Jupiter's First Quarter 2000 Form 10-Q...................... 3.5
Laws........................................................ 3.6(a)
Material Adverse Effect..................................... 3.1(a)
Media Metrix................................................ Preamble
Media Metrix Board Recommendation........................... 4.3(a)
Media Metrix Business Combination........................... 7.3(e)
Media Metrix Common Stock................................... 2.1(c)
Media Metrix Compensation and Benefit Plans................. 4.7(a)
Media Metrix Contract....................................... 4.3(b)
Media Metrix Designees...................................... 5.11
Media Metrix Disclosure Letter.............................. Article IV
Media Metrix ERISA Affiliate................................ 4.7(e)
Media Metrix Exchange Option................................ 2.5(a)
Media Metrix Intellectual Property.......................... 4.11(g)
Media Metrix Intellectual Property Licenses................. 4.11(b)
Media Metrix Meeting........................................ 5.3(a)
Media Metrix Pension Plan................................... 4.7(c)
Media Metrix Preferred Stock................................ 4.2
Media Metrix SEC Reports.................................... 4.4
Media Metrix Stockholder Proposals.......................... 5.3(a)
Media Metrix Termination Fee................................ 7.3(b)
Media Metrix Triggering Event............................... 7.3(b)
Media Metrix's 1999 Form 10-K............................... 4.1
Media Metrix's First Quarter 2000 Form 10-Q................. 4.5
Merger...................................................... Recitals
Merger Consideration........................................ 5.7(d)
Merger Sub.................................................. Preamble
Morgan Stanley.............................................. 3.16
Multiemployer Plan.......................................... 3.7(h)
Nasdaq...................................................... 2.2
person...................................................... 8.10
Recommendation.............................................. 5.3(a)
Registration Statement...................................... 5.3(b)
SEC......................................................... 3.4
Securities Act.............................................. 3.3(c)
Share Arrangements.......................................... 3.1(b)
Stockholders Meeting........................................ 5.3(a)
Subsidiaries................................................ 8.10
Superior Transaction........................................ 5.7(d)
Surviving Corporation....................................... 1.1
Takeover Laws............................................... 3.17
Tax Return.................................................. 3.14
Taxes....................................................... 3.14
</TABLE>
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<TABLE>
<CAPTION>
TERM SECTION
---- -----------
<S> <C>
Third Party................................................. 5.7(a)
Thomas Weisel............................................... 4.16
</TABLE>
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THIS AGREEMENT AND PLAN OF MERGER, dated as of June 26, 2000 (this
"Agreement"), is among Media Metrix, Inc., a Delaware corporation ("Media
Metrix"), MMX Acquisition Corp., a Delaware corporation ("Merger Sub"), and
Jupiter Communications, Inc., a Delaware corporation ("Jupiter").
WHEREAS, the respective Boards of Directors of Media Metrix, Merger Sub and
Jupiter have approved and have declared advisable the merger of Merger Sub with
and into Jupiter (the "Merger"), upon the terms and subject to the conditions
set forth herein, and have determined that the Merger and the other transactions
contemplated hereby are consistent with, and in furtherance of, their respective
business strategies and goals and are in the best interests of the companies and
their respective stockholders;
WHEREAS, the parties intend that the Merger constitute a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"); and
WHEREAS, the parties desire to make certain representations, warranties,
covenants and agreements in connection with the Merger and also to prescribe
various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereby agree
as follows:
ARTICLE I
THE MERGER
Section 1.1. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Delaware General Corporation
Law (the "DGCL"), Merger Sub shall be merged with and into Jupiter at the
Effective Time (as defined in Section 1.3). Following the Effective Time, the
separate corporate existence of Merger Sub shall cease and Jupiter shall be the
surviving corporation (the "Surviving Corporation") and shall succeed to and
assume all the rights and obligations of Merger Sub in accordance with the DGCL.
Section 1.2. Closing.
The closing of the Merger (the "Closing") will take place at 10:00 a.m.,
local time, at the offices of Fried, Frank, Harris, Shriver & Jacobson, One New
York Plaza, New York, New York 10004 on a date to be specified by the parties,
which shall be no later than the second business day after the first date that
all of the conditions set forth in Sections 6.1(a) through (e) have been
satisfied or waived, unless another place, time or date is agreed to by the
parties hereto (such time on such date, the "Closing Date").
Section 1.3. Effective Time.
Subject to the provisions of this Agreement, as soon as practicable on the
Closing Date, the parties (i) shall file with the Secretary of State for the
State of Delaware (the "Delaware Secretary of State") a certificate of merger or
other appropriate documents (the "Certificate of Merger") executed in accordance
with the relevant provisions of the DGCL and (ii) shall make all other filings
or recordings required under the DGCL necessary to effect the Merger. The Merger
shall become effective at the time of the filing of the Certificate of Merger
with the Delaware Secretary of State in accordance with the DGCL, or at such
subsequent date or time as Media Metrix and Jupiter shall agree and specify in
the Certificate of Merger (the time the Merger becomes effective being
hereinafter referred to as the "Effective Time").
Section 1.4. Effects of the Merger.
The Merger shall have the effects set forth in Section 259 of the DGCL.
Section 1.5. Certificate of Incorporation and Bylaws.
(a) The certificate of incorporation of Jupiter shall be amended as of the
Effective Time to read in its entirety as set forth on Exhibit A and as so
amended shall constitute the certificate of incorporation of the Surviving
Corporation until thereafter amended.
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(b) The bylaws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be adopted as the bylaws of the Surviving Corporation
until thereafter amended.
Section 1.6. Directors; Officers.
The directors and officers of Merger Sub at the Effective Time shall be the
directors and officers, respectively, of the Surviving Corporation until their
respective successors are duly elected and qualified.
ARTICLE II
EFFECT OF THE MERGER ON THE STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.1. Conversion of Securities.
At the Effective Time, by virtue of the Merger and without any action on
the part of Merger Sub, Jupiter or their respective stockholders:
(a) Each share of common stock, par value $0.001 per share, of Jupiter
("Jupiter Shares") held in the treasury of Jupiter and each Jupiter Share
owned by Media Metrix or any direct or indirect wholly owned Subsidiary (as
defined in Section 8.10) of Media Metrix or of Jupiter immediately prior to
the Effective Time shall be canceled and extinguished, without any
conversion thereof, and no payment shall be made with respect thereto.
(b) Each share of common stock, par value $.01 per share, of Merger
Sub issued and outstanding immediately prior to the Effective Time shall be
converted into one validly issued fully paid and non-assessable share of
common stock of the Surviving Corporation, and the Surviving Corporation
shall be a wholly owned Subsidiary of Media Metrix.
(c) Subject to the other provisions of this Section 2.1, each Jupiter
Share issued and outstanding immediately prior to the Effective Time shall,
except as otherwise provided in Section 2.1(a), be converted into the right
to receive 0.946 share (the "Exchange Ratio") of common stock, par value
$.01 per share, of Media Metrix ("Media Metrix Common Stock"). The shares
of Media Metrix Common Stock to be received as consideration pursuant to
the Merger with respect to Jupiter Shares, together with cash in lieu of
fractional shares of Media Metrix Common Stock as specified in Section 2.2,
is referred to herein as the "Merger Consideration."
(d) From and after the Effective Time, all Jupiter Shares converted in
accordance with Section 2.1(c) shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
holder of a certificate evidencing any Jupiter Shares outstanding
immediately prior to the Effective Time (a "Jupiter Stock Certificate")
shall cease to have any rights with respect thereto except the right to
receive the Merger Consideration in respect thereof. From and after the
Effective Time, all certificates representing the common stock of Merger
Sub shall be deemed for all purposes to represent the number of shares of
common stock of the Surviving Corporation into which they were converted in
accordance with Section 2.1(b).
(e) If, between the date of this Agreement and the Effective Time, the
outstanding shares of Media Metrix Common Stock shall have been changed
into a different number of shares by reason of any stock dividend, stock
split, reclassification, recapitalization, stock combination or other
similar change with respect to the Media Metrix Common Stock, the Exchange
Ratio shall correspondingly be adjusted to reflect such stock dividend,
stock split, reclassification, recapitalization, stock combination or other
similar change.
Section 2.2. Fractional Shares.
No fractional shares of Media Metrix Common Stock shall be issued as a
result of the conversion provided for in Section 2.1(c). In lieu of any such
fractional shares, the holder of a Jupiter Stock Certificate, upon surrender
thereof for exchange pursuant to Section 2.3, shall be entitled to receive a
cash payment
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therefor (without interest) in an amount determined by multiplying (x) the
closing price of a share of Media Metrix Common Stock as reported on the Nasdaq
National Market ("Nasdaq") Composite Tape on the last full trading day
immediately prior to the Closing Date by (y) the fractional interest to which
such holder would otherwise be entitled. Such payment with respect to fractional
shares is merely intended to provide a mechanical rounding off of, and is not a
separately bargained for, consideration. If more than one Jupiter Stock
Certificate shall be surrendered for the account of the same holder, the number
of shares of Media Metrix Common Stock to be issued to such holder in exchange
for the Jupiter Stock Certificates which have been surrendered shall be computed
on the basis of the aggregate number of shares represented by all of the Jupiter
Stock Certificates surrendered for the account of such holder. Any payment owed
with respect to fractional shares shall be rounded to the nearest cent.
Section 2.3. Exchange of Certificates.
(a) Media Metrix shall, promptly following the Effective Time, deposit with
an exchange agent designated by Media Metrix and reasonably acceptable to
Jupiter (the "Exchange Agent"), for the benefit of the holders of Jupiter
Shares, for exchange in accordance with this Section 2.3, certificates
representing shares of Media Metrix Common Stock issuable pursuant to Section
2.1(c) in exchange for outstanding Jupiter Shares and shall from time to time,
as needed, deposit cash in an amount required to be paid pursuant to Section 2.2
(such shares of Media Metrix Common Stock and cash being hereinafter referred to
as the "Exchange Fund").
(b) As soon as reasonably practicable after the Effective Time, Media
Metrix will instruct the Exchange Agent to mail to each holder of record of
Jupiter Stock Certificates whose shares were converted into the right to receive
shares of Media Metrix Common Stock pursuant to Section 2.1(c), (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Jupiter Stock Certificates shall pass, only upon proper
delivery of Jupiter Stock Certificates to the Exchange Agent and shall be in
such form and have such other provisions as Media Metrix and Jupiter may
reasonably specify, including offering holders of Jupiter Stock Certificates the
ability to hold their shares of Media Metrix Common Stock in book entry form in
lieu of the certificates provided for below) and (ii) instructions for use in
effecting the surrender of Jupiter Stock Certificates in exchange for
certificates evidencing shares of Media Metrix Common Stock. Upon surrender to
the Exchange Agent of a Jupiter Stock Certificate for cancellation, together
with such letter of transmittal, duly executed, and such other customary
documents as may be required pursuant to such instructions, the holder of such
Jupiter Stock Certificate shall be entitled to receive in exchange therefor (A)
certificates evidencing that number of whole shares of Media Metrix Common Stock
which such holder has the right to receive in respect of Jupiter Shares formerly
evidenced by such Jupiter Stock Certificate in accordance with Section 2.1(c) in
such denominations and registered in such names as such holder may request and
(B) cash in lieu of fractional shares of Media Metrix Common Stock, if any, and
unpaid dividends and distributions, if any, which such holder is entitled
pursuant to Section 2.3(c), and the Jupiter Stock Certificate so surrendered
shall forthwith be canceled. In the event of a transfer of ownership of Jupiter
Shares which is not registered in the transfer records of Jupiter, a certificate
evidencing the proper number of shares of Media Metrix Common Stock and/or cash
may be issued and/or paid in accordance with this Article II to a transferee if
the Jupiter Stock Certificate evidencing such Jupiter Shares is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 2.3, each Jupiter Stock
Certificate shall be deemed at any time after the Effective Time to evidence
only the right to receive upon such surrender the Merger Consideration payable
in respect thereof.
(c) Notwithstanding any other provisions of this Agreement, no dividends or
other distributions declared or made after the Effective Time with respect to
any shares of Media Metrix Common Stock and having a record date after the
Effective Time shall be paid to the holder of any unsurrendered Jupiter Stock
Certificate unless the holder shall first have surrendered such Jupiter Stock
Certificate as provided in this Section 2.3.
(d) All shares of Media Metrix Common Stock issued and cash paid upon the
surrender for exchange of Jupiter Stock Certificates in accordance with the
terms of this Article II shall be deemed to have been issued
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and paid, respectively, in full satisfaction of all rights pertaining to the
Jupiter Shares theretofore represented by such Jupiter Stock Certificates.
(e) Any portion of the Exchange Fund which remains undistributed to the
holders of Jupiter Shares for six months after the Effective Time shall be
delivered to Media Metrix, upon demand, and any holders of Jupiter Shares who
have not theretofore complied with this Article II shall thereafter look only to
Media Metrix for payment of their claim for the Merger Consideration payable in
respect thereof.
(f) None of Media Metrix, Jupiter, Merger Sub, the Surviving Corporation or
the Exchange Agent shall be liable to any person in respect of any shares of
Media Metrix Common Stock (or dividends or distributions with respect thereto)
or cash from the Exchange Fund in each case delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Jupiter Stock Certificate shall not have been surrendered prior to seven years
after the Effective Time (or immediately prior to such earlier date on which any
Merger Consideration payable in respect of the Jupiter Shares evidenced by such
Jupiter Stock Certificates, or any dividends or distributions with respect to
such Merger Consideration, would otherwise escheat to or become the property of
any Governmental Entity (as defined in Section 3.3)), any such Merger
Consideration (and any such dividends or distributions) shall, to the extent
permitted by applicable law, become the property of the Surviving Corporation
free and clear of all claims or interest of any person previously entitled
thereto.
(g) Media Metrix and Merger Sub shall be entitled to deduct and withhold
from the Merger Consideration otherwise payable pursuant to this Agreement to
any holder of Jupiter Shares such amounts as Media Metrix or Merger Sub is
required to deduct and withhold with respect to the making of such payment under
the Code, or any provision of state, local or foreign Tax Law (as such terms are
defined in Sections 3.14 and 3.6, respectively). To the extent that amounts are
so withheld by Media Metrix or Merger Sub, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
Jupiter Shares in respect of which such deduction and withholding was made by
Media Metrix or Merger Sub.
(h) If any Jupiter Stock Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Jupiter Stock Certificate to be lost, stolen or destroyed and, if required
by Media Metrix, the posting by such person of a bond in such reasonable amount
as Media Metrix may direct as indemnity against any claim that may be made
against it with respect to such Jupiter Stock Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Jupiter Stock
Certificate the Merger Consideration payable in respect thereof pursuant to this
Article II.
Section 2.4. Stock Transfer Books.
There shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation of Jupiter Shares which were outstanding
immediately prior to the Effective Time. If, after the Effective Time, Jupiter
Stock Certificates are presented to the Surviving Corporation or the Exchange
Agent for any reason, they shall be canceled and exchanged as provided in this
Article II, except as otherwise provided by Law.
Section 2.5. Treatment of Jupiter Stock Options.
(a) Prior to the Effective Time, Media Metrix and Jupiter shall take all
such actions as may be necessary to cause (i) each outstanding option to acquire
Jupiter Shares under Jupiter's 1997 Employee Stock Option Plan or Jupiter's 1999
Stock Incentive Plan (the "Jupiter Plans") and (ii) each other outstanding
option to purchase Jupiter Shares granted as compensation for services to
Jupiter or any of its Subsidiaries (each option described in clause (i) or (ii),
a "Jupiter Option") to be automatically converted at the Effective Time into an
option (a "Media Metrix Exchange Option") to purchase that number of shares of
Media Metrix Common Stock equal to the number of Jupiter Shares issuable
immediately prior to the Effective Time upon exercise of such Jupiter Option
(without regard to actual restrictions on exercisability) multiplied by the
Exchange Ratio, with an exercise price equal to the exercise price which was in
effect under such Jupiter Option immediately prior to the Effective Time divided
by the Exchange Ratio, and with such Media Metrix Exchange Option being
otherwise subject to the same terms and conditions as the terms and conditions
of such Jupiter Option immediately before the Effective Time. It is the
intention of the parties that the options
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so assumed by Media Metrix qualify following the Effective Time as incentive
stock options as defined in Section 422 of the Code if and to the extent such
options qualified as incentive stock options prior to the Effective Time. In
connection with the issuance of Media Metrix Exchange Options, Media Metrix
shall (i) reserve for issuance the aggregate number of shares of Media Metrix
Common Stock that will become subject to Media Metrix Exchange Options pursuant
to this Section 2.5, (ii) from and after the Effective Time, upon exercise of
Media Metrix Exchange Options, make available for issuance all shares of Media
Metrix Common Stock covered thereby, subject to the terms and conditions
applicable thereto, and (iii) within 10 days following the Effective Time, file
a registration statement on Form S-8 covering the shares to be issued upon
exercise of the Media Metrix Exchange Options.
(b) For each Jupiter Option that is converted into a Media Metrix Exchange
Option in accordance with this Section 2.5, Jupiter shall ensure that no action
is taken (including by the Board of Directors of Jupiter) which could result in
all or any portion of such Media Metrix Exchange Option becoming exercisable on
or after the Effective Time sooner than under the schedule as to exercisability
applicable to such Jupiter Option as in effect prior to the Effective Time.
(c) Jupiter hereby represents and warrants that it has taken all steps
necessary under Jupiter's 1999 Employee Stock Purchase Plan (the "Jupiter ESPP")
such that (i) following the date hereof, no person who is not then a participant
in the Jupiter ESPP shall be allowed to participate therein, and (ii) the
"Purchase Interval" (as defined in the Jupiter ESPP) during which the Effective
Time occurs shall be the final Purchase Interval. At the "Purchase Date" (as
defined in the Jupiter ESPP) applicable to such final Purchase Interval (which
shall occur not later than the day prior to the Effective Time), (x) all payroll
deductions theretofore taken for purchases under the Jupiter ESPP shall be
applied to the purchase of Jupiter Shares, (y) no further purchase rights shall
exist under the Jupiter ESPP Plan and (z) the Jupiter ESPP shall terminate. As
soon as practicable following the Effective Time, Media Metrix shall cause the
Surviving Corporation to refund (without interest) any payroll deductions held
under the Jupiter ESPP and not applied to the purchase of Jupiter Shares. At the
Effective Time, the Surviving Corporation and its Subsidiaries shall become
participating employers under Media Metrix's 2000 Employee Stock Purchase Plan.
Section 2.6. Investment of Exchange Fund.
The Exchange Agent shall invest any cash included in the Exchange Fund, as
directed by Media Metrix, on a daily basis. Any interest and other income
resulting from such investments shall be paid to Media Metrix upon termination
of the Exchange Fund pursuant to Section 2.3(e).
Section 2.7. Appraisal Rights.
In accordance with Section 262 of the DGCL, no appraisal rights shall be
available to holders of Jupiter Shares in connection with the Merger.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF JUPITER
Jupiter represents and warrants to Media Metrix and Merger Sub that, except
as set forth in the corresponding sections or subsections of the Disclosure
Letter delivered to Media Metrix by Jupiter concurrently with entering into this
Agreement (the "Jupiter Disclosure Letter") (all references to Jupiter in this
Article III being deemed to include reference to its predecessor, unless the
context otherwise requires):
Section 3.1. Organization, Qualification, Etc.
(a) Jupiter is a corporation duly organized, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation and has the
corporate power and authority to own its assets and to carry on its business as
it is now being conducted, and is duly qualified to do business and is in good
standing in each jurisdiction in which the ownership of its assets or the
conduct of its business requires such qualification, except for jurisdictions in
which such failure to be so qualified or to be in good standing would not,
individually or in the aggregate, have a Material Adverse Effect (as hereinafter
defined) on Jupiter. As used in this
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Agreement, any reference to any state of facts, event, change or effect having a
"Material Adverse Effect" on or with respect to Jupiter or Media Metrix, as the
case may be, means such state of facts, event, change or effect that (i) has
had, or would reasonably be expected to have, a material adverse effect on the
assets, liabilities, business, results of operations or financial condition of
Jupiter and its Subsidiaries, taken as a whole, or Media Metrix and its
Subsidiaries, taken as a whole, as the case may be, or (ii) would reasonably be
expected to prevent or substantially delay consummation of the transactions
contemplated by this Agreement; provided that none of the following shall be
taken into account in determining whether there has been or will be a Material
Adverse Effect: (x) any change in the market price or trading volume of
Jupiter's stock or Media Metrix's stock, as the case may be, after the date
hereof; (y) any adverse effect on Jupiter or Media Metrix, as the case may be,
attributable solely to conditions affecting the industries in which Jupiter or
Media Metrix, as the case may be, participates, the U.S. economy as a whole or
foreign economies in any locations where Jupiter or Media Metrix, as the case
may be, or any of their respective Subsidiaries has material operations or sales
(and not having a materially disproportionate effect on Jupiter or Media Metrix,
as the case may be); or (z) any adverse effect arising solely from or relating
solely to any change in accounting requirements or principles or any change in
applicable rules or regulations or the interpretation thereof. The copies of
Jupiter's certificate of incorporation and bylaws filed or incorporated by
reference in Jupiter's Annual Report on Form 10-K for the year ended December
31, 1999 ("Jupiter's 1999 Form 10-K") are complete and correct and in full force
and effect on the date hereof.
(b) Each of Jupiter's Subsidiaries is an entity duly organized, validly
existing and in good standing (where applicable) under the Laws of its
jurisdiction of incorporation or organization, has the power and authority to
own its assets and to carry on its business as it is now being conducted, and is
duly qualified to do business and is in good standing in each jurisdiction in
which the ownership of its assets or the conduct of its business requires such
qualification, except for jurisdictions where the failure to be so organized,
existing, qualified or in good standing would not, individually or in the
aggregate, have a Material Adverse Effect on Jupiter. All the outstanding shares
of capital stock of, or other ownership interests in, Jupiter's Subsidiaries are
validly issued, fully paid and non-assessable and are owned by Jupiter, and such
ownership is free and clear of all liens, claims, charges or encumbrances of any
kind ("Encumbrances"). There are no existing options, rights of first refusal,
conversion rights, preemptive rights, calls, commitments, arrangements or
obligations of any kind ("Share Arrangements") relating to the issued or
unissued capital stock or other securities of, or other ownership interests in,
any Subsidiary of Jupiter. None of the certificates of incorporation or bylaws
or other organizational documents of any of Jupiter's Subsidiaries purport to
grant rights to any person other than (1) customary rights with respect to
corporate governance given to all stockholders pro rata in accordance with their
holdings and (2) customary rights of indemnification of directors and officers.
Jupiter has delivered to Media Metrix complete and correct copies of the
certificate of incorporation and bylaws or other organizational documents of
each of Jupiter's Subsidiaries.
(c) A complete listing of Jupiter's Subsidiaries is set forth in Section
3.1(c) of the Jupiter Disclosure Letter. Except as set forth in Section 3.1(c)
of the Jupiter Disclosure Letter, Jupiter does not directly or indirectly own
any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture, business association or other person.
Section 3.2. Capital Stock.
(a) The authorized stock of Jupiter consists of 100,000,000 Jupiter Shares
and 5,000,000 shares of preferred stock, par value $.001 per share (the "Jupiter
Preferred Stock"). As of June 22, 2000, 15,549,572 Jupiter Shares and no shares
of Jupiter Preferred Stock were issued and outstanding and no Jupiter Shares
were held in treasury. All of the outstanding Jupiter Shares have been validly
issued and are fully paid and non-assessable. As of June 22, 2000, there were no
outstanding Share Arrangements relating to the issued or unissued capital stock
or other securities of, or other ownership interests in, Jupiter, other than:
(i) options to purchase 2,503,744 Jupiter Shares granted on or prior
to such date pursuant to Jupiter's 1997 Employee Stock Option Plan;
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(ii) options to purchase 1,612,415 Jupiter Shares granted on or prior
to such date pursuant to Jupiter's 1999 Stock Incentive Plan;
(iii) rights to purchase a maximum of 434,534 Jupiter Shares pursuant
to the Jupiter ESPP; and
(iv) convertible promissory notes in the aggregate principal amount of
$1,174,454, due January 7, 2001.
(b) Since June 22, 2000, there have been no increases to any of the amounts
set forth in Section 3.2(a), other than increases in the number of outstanding
Jupiter Shares by reason of issuances of Jupiter Shares upon exercise of any of
Jupiter Options enumerated in clauses (i) and (ii) of Section 3.2(a), which
issuances have reduced the applicable number of Jupiter Options set forth in
clauses (i) and (ii) of Section 3.2(a) by a corresponding amount, nor has
Jupiter modified, amended or entered into new Share Arrangements relating to the
issued or unissued capital stock or other securities of, or other ownership
interests in, Jupiter.
Section 3.3. Corporate Authority; No Violation.
(a) Jupiter has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement and the performance by Jupiter of its obligations hereunder
have been duly and validly authorized by the Board of Directors of Jupiter and,
except for the adoption by its stockholders of this Agreement, no other
corporate proceedings on the part of Jupiter are necessary to authorize this
Agreement or the transactions contemplated hereby. The Board of Directors of
Jupiter, at a meeting duly called and held at which a quorum was present
throughout, has unanimously determined that the transactions contemplated by
this Agreement are in the best interest of Jupiter and its stockholders and to
recommend to such stockholders that they vote in favor of this Agreement and the
Merger (the "Jupiter Board Recommendation"). The Jupiter Board Recommendation
has not been revoked or modified. This Agreement has been duly and validly
executed and delivered by Jupiter and, assuming this Agreement constitutes a
valid and binding agreement of the other parties hereto, constitutes a valid and
binding agreement of Jupiter, enforceable against Jupiter in accordance with its
terms (except insofar as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar Laws affecting creditors'
rights generally, or by principles governing the availability of equitable
remedies).
(b) The execution, delivery and performance of this Agreement by Jupiter
does not, and the consummation by Jupiter of the Merger and the other
transactions contemplated hereby will not, constitute or result in (with or
without notice, lapse of time or both) (i) a breach or violation of, or a
default under, or the creation of any rights in favor of any party under, the
certificate of incorporation or bylaws of Jupiter or the comparable governing
instruments of any of its Subsidiaries, (ii) a breach or violation of, or a
default under, or an acceleration of any obligations under, or the creation of
any Encumbrance on the assets of Jupiter or any of its Subsidiaries pursuant to,
any agreement, lease, contract, commitment, note, mortgage, indenture,
arrangement, nongovernmental permit or license or other obligation (each, a
"Contract") binding upon Jupiter or any of its Subsidiaries (each, a "Jupiter
Contract") or (provided, as to consummation, the filings and notices are made,
and approvals are obtained, as referred to in Section 3.3(c)) any applicable Law
or Decree (as defined in Section 3.6) or governmental permit or license to which
Jupiter or any of its Subsidiaries is subject, or (iii) any change in the rights
or obligations of any party under any of the Jupiter Contracts, except for any
breach, violation, default, acceleration, creation of rights or Encumbrances or
change that would not, individually or in the aggregate, have a Material Adverse
Effect on Jupiter.
(c) Other than in connection with or in compliance with the provisions of
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the "Securities Act"), the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder (the
"Exchange Act"), the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder (the "HSR Act"),
and the securities or blue sky Laws of the various states and other than the
filing of the Certificate of Merger with the Delaware Secretary of State, no
authorization, consent or approval of, or filing with, any governmental,
administrative or regulatory body or authority ("Governmental Entity") is
necessary for the consummation by Jupiter of the transactions
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contemplated by this Agreement, except for such authorizations, consents,
approvals or filings that, if not obtained or made, would not, individually or
in the aggregate, have a Material Adverse Effect on Jupiter.
Section 3.4. Reports and Financial Statements.
Jupiter has timely filed with the Securities and Exchange Commission (the
"SEC") all forms, reports, schedules, statements and other documents required to
be filed by it since October 7, 1999 under the Securities Act or the Exchange
Act (such documents, as supplemented or amended since the time of filing, the
"Jupiter SEC Reports"). As of their respective dates, the Jupiter SEC Reports,
including any financial statements or schedules included or incorporated by
reference therein, at the time filed (and, in the case of registration
statements and proxy statements, on the dates of effectiveness and the dates of
mailing, respectively) (i) complied in all material respects with the applicable
requirements of the Securities Act and the Exchange Act (including requirements
as to the filing of Exhibits), and (ii) did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The audited consolidated financial
statements and unaudited consolidated interim financial statements included or
incorporated by reference in the Jupiter SEC Reports (including any related
notes and schedules) fairly present, in all material respects, the financial
position of Jupiter and its consolidated Subsidiaries as of the dates thereof
and the results of their operations and their cash flows and other information
included therein for the periods set forth therein, in each case in accordance
with generally accepted accounting principles in the United States ("GAAP")
consistently applied during the periods involved (except as otherwise disclosed
in the notes thereto) and subject, in the case of the interim financial
statements, to normal year-end adjustments that would not, individually or in
the aggregate, be material in amount or effect.
Section 3.5. No Undisclosed Liabilities.
Neither Jupiter nor any of its Subsidiaries has any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise (and
whether or not the subject of any other representation or warranty hereunder),
except (a) liabilities or obligations reserved against or disclosed in the
unaudited consolidated interim financial statements of Jupiter as of and for the
three months ended March 31, 2000 contained in Jupiter's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2000 ("Jupiter's First Quarter 2000
Form 10-Q") or disclosed in the footnotes thereto or in the footnotes to the
audited consolidated financial statements of Jupiter as of and for the fiscal
year ended December 31, 1999 included in Jupiter's 1999 Form 10-K or otherwise
disclosed in Jupiter's First Quarter 2000 Form 10-Q or Jupiter's 1999 Form 10-K
(other than the financial statements contained therein) (in each case, in the
amount or of the magnitude so reserved against or disclosed), and (b)
liabilities or obligations which would not, individually or in the aggregate,
have a Material Adverse Effect on Jupiter.
Section 3.6. Compliance with Laws.
Jupiter and each of its Subsidiaries each:
(a) conducts its businesses in compliance with all federal, state,
local and foreign statutes and laws, and all regulations, ordinances and
rules promulgated thereunder (collectively, "Laws") applicable thereto or
to its Employees;
(b) is not subject to any judgment, order, ruling, injunction or
decree of any court or Governmental Entity (collectively, "Decrees");
(c) has all permits, licenses, authorizations, orders and approvals
of, and has made all filings, applications and registrations with, all
Governmental Entities that are required in order to permit it to conduct
its businesses substantially as presently conducted; all such permits,
licenses, authorizations, orders and approvals are in full force and effect
and, to Jupiter's knowledge, no suspension or cancellation of any of them
is threatened; and
(d) has received, since December 31, 1998, no notification or
communication from any Governmental Entity (i) asserting that it is not in
compliance with any Laws or Decrees, (ii) threatening to revoke any permit,
license, authorization, order or approval, or (iii) failing to approve any
proposed
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acquisition, or stating the intention not to approve any acquisition
proposed to be effected by it within a certain time period or indefinitely;
except where the failure of any of the foregoing to be true would not,
individually or in the aggregate, have a Material Adverse Effect on Jupiter.
Section 3.7. Employee Benefit Plans.
(a) Section 3.7 of the Jupiter Disclosure Letter contains a complete list
of (i) all bonus, vacation, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock and stock option, incentive, severance or
change-in-control plans or other similar Contracts, (ii) all employment
Contracts, (iii) all medical, dental, disability, health and life insurance
plans or other Contracts, and (iv) all other employee benefit and fringe benefit
plans or other Contracts, in the case of each of (i) through (iv) maintained or
contributed to by Jupiter or any of its Subsidiaries for the benefit of any of
the current or former officers, employees, directors or consultants (each of
such persons, former or current, an "Employee") of Jupiter or any of its
Subsidiaries or the beneficiaries of any of the foregoing, or pursuant to which
Jupiter or any of its Subsidiaries may have any liability (collectively, the
"Jupiter Compensation and Benefit Plans"), but excluding for scheduling purposes
any Jupiter Compensation and Benefit Plan which is not material.
(b) Jupiter has provided or made available to Media Metrix copies of all
Jupiter Compensation and Benefit Plans listed on Section 3.7 of the Jupiter
Disclosure Letter, including all amendments thereto, and, with respect to each
of the Jupiter Compensation and Benefit Plans, as applicable, the trust
documents, determination, opinion and notification letters issued by the
Internal Revenue Service, summary plan descriptions, employee booklets, most
recent nondiscrimination tests, most recent annual reports (Form 5500), COBRA
forms and notices, correspondence or inquiries by the Internal Revenue Service
or the Department of Labor, material written Contracts, including administrative
service agreements, group annuity contracts and group insurance contracts, and
material employee communications, and all of such copies are true and correct.
(c) Section 3.7 of the Jupiter Disclosure Letter sets forth a complete and
correct list of each Employee of Jupiter or any of its Subsidiaries who holds
any Jupiter Option as of the date of this Agreement, together with the number of
Jupiter Shares subject to such Jupiter Option, the exercise price of such
Jupiter Option, the exercisable and unexercisable portion of such Jupiter
Option, and the expiration date of such Jupiter Option. In addition, Section 3.7
of the Jupiter Disclosure Letter sets forth, in the aggregate, the number of
Jupiter Shares underlying (i) any other rights under any Jupiter Compensation
and Benefit Plan (other than plans that are qualified plans under Section 401(a)
of the Code) to receive Jupiter Shares and (ii) compensation based on the value
of Jupiter Shares.
(d) Each Jupiter Compensation and Benefit Plan has been and is being
administered in accordance with the terms thereof and all applicable Law except
where the failure to do so would not, individually or in the aggregate, have a
Material Adverse Effect on Jupiter. Each Jupiter Compensation and Benefit Plan
which is an "employee pension benefit plan" within the meaning of Section 3(2)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")
(each such plan, a "Jupiter Pension Plan") and is intended to be qualified under
Section 401(a) of the Code is so qualified and has received a favorable
determination letter (or opinion or notification letter, if applicable) from the
Internal Revenue Service or there is a period of time remaining under applicable
Internal Revenue Service regulations or pronouncements in which to apply for
such a letter and make any amendments necessary to obtain a favorable
determination as to the qualified status of each such Jupiter Pension Plan, and
Jupiter is not aware of any circumstances which could result in the revocation
or denial of any such favorable determination letter. To Jupiter's knowledge, no
"prohibited transaction," within the meaning of Section 4975 of the Code or
Section 406 of ERISA, has occurred with respect to any Jupiter Compensation and
Benefit Plan that could result in liability to Jupiter or any of its
Subsidiaries. There is no pending or, to Jupiter's knowledge, threatened
Litigation relating to the employment, termination of employment, compensation
or employee benefits of any Employee of Jupiter or any of its Subsidiaries
which, if determined adversely to Jupiter or any of its Subsidiaries, would,
individually or in the aggregate, have a Material Adverse Effect on Jupiter.
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(e) No Jupiter Compensation and Benefit Plan promises or provides retiree
medical or other retiree welfare benefits to any person, other than health
continuation coverage as required by Section 4980B of the Code or Part 6 of
Title I of ERISA.
(f) No material liability under Title IV of ERISA has been or is reasonably
expected to be incurred by Jupiter or any of its Subsidiaries or any entity
which is considered one employer with Jupiter under Section 4001(a)(15) of ERISA
or Section 414 of the Code (any such entity, a "Jupiter ERISA Affiliate"), other
than such liabilities that have been previously satisfied.
(g) All contributions, premiums and payments required to be made under the
terms of any Jupiter Compensation and Benefit Plan have been made, except where
the failure to do so would not, individually or in the aggregate, have a
Material Adverse Effect on Jupiter. Neither any Jupiter Pension Plan nor any
single-employer plan of a Jupiter ERISA Affiliate is a "defined benefit plan"
within the meaning of Section 3(35) of ERISA.
(h) Neither Jupiter nor any of its Subsidiaries contributes to or is
required to contribute to, or has ever contributed to or been required to
contribute to, any "multiemployer plan" within the meaning of Section 4001(a)(3)
of ERISA (a "Multiemployer Plan").
(i) The execution of, and performance of the transactions contemplated in,
this Agreement will not (either alone or upon the occurrence of any additional
or subsequent events) (i) constitute an event under any Jupiter Compensation and
Benefit Plan, trust or loan that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligation to fund benefits with respect
to any Employee, (ii) result in the triggering or imposition of any material
restrictions or limitations on the ability of any Jupiter Compensation and
Benefit Plan to be amended or terminated in accordance with its terms as in
effect on the date hereof or (iii) result in any payment or benefit that will or
may be made by Jupiter, any of its Subsidiaries, Media Metrix or any of their
respective affiliates that will be characterized as an "excess parachute
payment" within the meaning of Section 280G(b)(1) of the Code.
(j) In the event that any individual is classified by Jupiter or any of its
Subsidiaries as a non-employee (such as an independent contractor, leased
employee, consultant or special consultant) and is later reclassified as an
employee upon governmental or judicial review, notwithstanding such
reclassification, no such individual shall be eligible to participate in any
Jupiter Compensation and Benefit Plan, except where such eligibility would not,
individually or in the aggregate, have a Material Adverse Effect on Jupiter.
(k) The contributions of Jupiter and its Subsidiaries to any trust
described in Section 501(c)(9) of the Code have complied with Section 419A of
the Code (if applicable).
Section 3.8. Absence of Certain Changes or Events.
Since March 31, 2000, (a) the businesses of Jupiter and its Subsidiaries
have been conducted in all material respects in the ordinary course consistent
with past practice, (b) Jupiter and its Subsidiaries have not engaged in any
material transaction or series of related transactions other than in the
ordinary course consistent with past practice, (c) there has not been any event,
occurrence or development, alone or taken together with all other existing
facts, that, individually or in the aggregate, would have a Material Adverse
Effect on Jupiter, and (d) neither Jupiter nor any of its Subsidiaries has
taken, or failed to take, any action which, if taken or failed to be taken on or
after the date hereof, would constitute a breach of Section 5.1(a).
Section 3.9. Litigation.
There is no Litigation pending, or, to Jupiter's knowledge, threatened,
against or affecting Jupiter or any of its Subsidiaries or any of their
respective properties, at law or in equity or before any Governmental Entity,
which, if determined adversely to Jupiter or such Subsidiary, would,
individually or in the aggregate, have a Material Adverse Effect on Jupiter.
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Section 3.10. Title to Assets.
Jupiter and its Subsidiaries own or hold under valid leases all the assets
necessary for the conduct of their businesses as presently conducted, except
where the failure to own or hold such assets would not, individually or in the
aggregate, have a Material Adverse Effect on Jupiter.
Section 3.11. Intellectual Property.
(a) Section 3.11(a) of the Jupiter Disclosure Letter contains a true and
complete list of all patents, patent applications, registered trademarks,
trademark applications, trademarks, trade names, registered service marks,
service mark applications, service marks, Internet domain name registrations,
copyrights, copyright applications and copyright registrations of Jupiter or any
of its Subsidiaries and all other applications, filings and formal actions made
or taken pursuant to Law by Jupiter or any of its Subsidiaries to protect its
interests in Jupiter Intellectual Property (as hereinafter defined).
(b) All of the material Jupiter Intellectual Property which are licenses,
sublicenses, permissions or other Contracts ("Jupiter Intellectual Property
Licenses"), and the parties, date and term of each Jupiter Intellectual Property
License are set forth in Section 3.11(b) of the Jupiter Disclosure Letter.
(c) With respect to each item of the Jupiter Intellectual Property
(including the Intellectual Property Rights set forth in Sections 3.11(a) and
(b) of the Jupiter Disclosure Letter) either (i) Jupiter or an affiliate of
Jupiter is the sole and exclusive owner of, with all right, title and interest
in and to (free and clear of any Encumbrances), such item of Jupiter
Intellectual Property or (ii) Jupiter has full and unencumbered rights to use
such item of Jupiter Intellectual Property pursuant to a valid and enforceable
Jupiter Intellectual Property License (and is not contractually obligated to
grant any rights or make any royalty or other payments to any third party in
respect thereof). The Jupiter Intellectual Property includes all of the
Intellectual Property Rights that are necessary for the conduct of the
businesses of Jupiter and its Subsidiaries as currently conducted or currently
contemplated to be conducted.
(d) There is no pending or, to Jupiter's knowledge, threatened Litigation
(i) challenging the validity, effectiveness, legality, use, enforceability or
ownership by Jupiter or any of its Subsidiaries of any Jupiter Intellectual
Property or (ii) to the effect that Jupiter or any of its Subsidiaries, the
continued operation of their businesses as currently conducted and as currently
contemplated to be conducted, or any of the Jupiter Intellectual Property or the
exercise of any rights therein, infringes, interferes with, misappropriates or
otherwise comes into conflict with any Intellectual Property Right of any
person, which, if determined adversely to Jupiter or such Subsidiary, would,
individually or in the aggregate, have a Material Adverse Effect on Jupiter, nor
are there any valid grounds for any bona fide claim of any such kind. All items
of Jupiter Intellectual Property are enforceable, valid, subsisting and in full
force and effect, except where the failure of any of the foregoing to be true
would not, individually or in the aggregate, have a Material Adverse Effect on
Jupiter. To Jupiter's knowledge, there is no unauthorized use, infringement or
misappropriation of, or any interference or conflict with, any Jupiter
Intellectual Property by any person, including any Employee of Jupiter or any
Subsidiary.
(e) All Employees, agents and contractors who have contributed to or
participated in the conception and development of Jupiter Intellectual Property
on behalf of Jupiter or any of its Subsidiaries, have executed (i) nondisclosure
agreements and (ii) have been a party to enforceable and appropriate instruments
of assignment (including work for hire agreements with respect to any
copyrights) in favor of Jupiter or one of its Subsidiaries in accordance with
applicable Law, that have conveyed to Jupiter or one of its Subsidiaries full,
effective, exclusive and original ownership in and to all Intellectual Property
Rights arising from the efforts of such personnel.
(f) Neither the execution, delivery and performance of this Agreement nor
the consummation of the transactions contemplated hereby will cause the
diminution, termination or forfeiture of or otherwise alter or impair any rights
or interests of Jupiter or any of its Subsidiaries in and to any of the Jupiter
Intellectual Property which would, individually or in the aggregate, have a
Material Adverse Effect on Jupiter.
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(g) The term "Intellectual Property Rights" shall mean (i) all inventions
(whether patentable or unpatentable and whether or not reduced to practice), all
improvements thereon, and all patents, patent applications and patent
disclosures, together with all reissues, continuations, continuations-in-part,
revisions, divisions, extensions and reexaminations thereof, (ii) all
trademarks, service marks, trade dress, logos, trade names, domain names and
corporate names, and including all goodwill associated therewith, and all
applications, registrations and renewals in connection therewith, (iii) all
copyrightable works, all copyrights, and all applications, registrations and
renewals in connection therewith, (iv) all trade secrets and confidential
business information (including but not limited to research and development,
know-how, business models, formulas, compositions, manufacturing and production
processes and techniques, statistical models, methods, schematics, technology,
flowcharts, block diagrams, technical data, designs, drawings, specifications,
process, customer and supplier lists, pricing and cost information, business and
marketing plans and proposals, confidential information regarding or gathered
from persons, and all design rights whether or not protected by patent,
copyright or other protection), (v) all computer software (including data,
databases and related documentation) in whatever form, (vi) all copies and
tangible embodiments of any of the foregoing (in whatever form or medium) and
(vii) all licenses, sublicenses, permissions or other Contracts in connection
with any of the foregoing. The term "Jupiter Intellectual Property" shall mean
all Intellectual Property Rights which are used or are proposed to be used in
connection with the conduct of the business of Jupiter or any of its
Subsidiaries as currently conducted or currently contemplated to be conducted,
and shall include any such Intellectual Property Rights which are owned by any
affiliate of Jupiter.
Section 3.12. Material Contracts.
Neither Jupiter nor any of its Subsidiaries nor any other party is in
breach of or in default under any Jupiter Contract except for such breaches and
defaults which would not, individually or in the aggregate, have a Material
Adverse Effect on Jupiter. Neither Jupiter nor any of its Subsidiaries is party
to any Contract containing any provision or covenant limiting in any material
respect the ability of Jupiter or any of its Subsidiaries to (a) sell any
products or service of or to any other person, (b) engage in any line of
business or (c) compete with or to obtain products or services from any person,
or limiting the ability of any person to provide products or services to Jupiter
or any of its Subsidiaries. Jupiter has no further liability under the Third
Amended and Restated Operating Agreement of Jupiter Communications, LLC or any
predecessor Contract.
Section 3.13. Labor Matters.
Jupiter and its Subsidiaries do not have any labor Contracts (including any
collective bargaining agreements) with any persons employed by Jupiter or any of
its Subsidiaries or any persons otherwise performing services primarily for
Jupiter or any of its Subsidiaries, nor is Jupiter or any of its Subsidiaries in
the process of negotiating any such Contract. There is no labor strike, dispute
or stoppage pending or, to Jupiter's knowledge, threatened against Jupiter or
any of its Subsidiaries which, individually or in the aggregate, would have a
Material Adverse Effect on Jupiter. Neither Jupiter nor any of its Subsidiaries
is the subject of any Litigation asserting that it has committed an unfair labor
practice (within the meaning of the National Labor Relations Act) which
Litigation, if determined adversely to Jupiter or such Subsidiary, would,
individually or in the aggregate, have a Material Adverse Effect on Jupiter, or
any Litigation seeking to compel it to bargain with any labor organization as to
wages and conditions of employment. There are, to Jupiter's knowledge, no
organizational efforts currently being made involving any of the employees of
Jupiter or any of its Subsidiaries.
Section 3.14. Tax Matters.
(a) Jupiter and each of its Subsidiaries have (i) filed all federal, state,
local and foreign Tax Returns (as hereinafter defined) required to be filed by
them (taking into account extensions), (ii) paid or accrued all Taxes shown to
be due on such Returns or which are otherwise due and payable and (iii) paid or
accrued all Taxes for which a notice of assessment or collection has been
received, except, in the case of clause (i), (ii) or (iii), for any such
filings, payments or accruals which would not, individually or in the aggregate,
have a Material Adverse Effect on Jupiter. Neither the Internal Revenue Service
nor any other taxing authority has asserted in writing any claim for Taxes, or
to Jupiter's knowledge, is threatening to assert any claims for Taxes, against
Jupiter or any of its Subsidiaries which claims, if determined adversely to
Jupiter or such Subsidiary,
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would, individually or in the aggregate, have a Material Adverse Effect on
Jupiter. Jupiter and each of its Subsidiaries have withheld or collected and
paid over to the appropriate Governmental Entities (or are properly holding for
such payment) all Taxes required by Law to be withheld or collected. There are
no outstanding Contracts extending or waiving the statutory period of limitation
applicable to any material Tax Return of Jupiter or any of its Subsidiaries.
Neither Jupiter nor any of its Subsidiaries has made an election under Section
341(f) of the Code. There are no Encumbrances for Taxes upon the assets of
Jupiter or any of its Subsidiaries, other than Encumbrances for Taxes that are
not yet due, Encumbrances that are being contested in good faith in accordance
with applicable law and disclosed in Section 3.14(a) of the Jupiter Disclosure
Letter and Encumbrances which would not, individually or in the aggregate, have
a Material Adverse Effect on Jupiter. Neither Jupiter nor any of its
Subsidiaries (i) has any liability under Treasury Regulation Section 1.1502-6 or
analogous state, local or foreign Law for any Taxes, other than for Taxes of
Jupiter or its Subsidiaries or (ii) is a party to a Tax sharing or Tax indemnity
Contract or any other Contract of a similar nature with any entity other than
Jupiter or any of its Subsidiaries that remains in effect. No claim has been
made in writing by a taxing authority in a jurisdiction where Jupiter or any of
its Subsidiaries does not file Tax Returns that Jupiter or any of its
Subsidiaries is or may be subject to taxation by that jurisdiction where such
claim, if determined adversely to Jupiter or such Subsidiary, would,
individually or in the aggregate, have a Material Adverse Effect on Jupiter.
Neither Jupiter nor any of its Subsidiaries is the subject of any currently
ongoing audit or examination with respect to Taxes, nor, to Jupiter's knowledge,
has any such audit been threatened or proposed by any taxing authority.
(b) Jupiter does not know of any fact relating to Jupiter or its
stockholders that could reasonably be expected to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code.
For purposes of this Agreement: (i) "Taxes" shall mean any and all federal,
state, local, foreign or other taxes of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any taxing authority, including taxes or other
charges on or with respect to income, franchises, windfall or other profits,
gross receipts, property, sales, use, capital stock, payroll, employment, social
security, workers' compensation, unemployment compensation, or net worth, and
taxes or other charges in the nature of excise, withholding, ad valorem or value
added, and includes any liability for Taxes of another person, as a transferee
or successor, under Treasury Regulation Section 1.1502-6 or analogous provision
of Law or otherwise; and (ii) "Tax Return" shall mean any return, report or
similar statement (including the attached schedules) required to be filed with
respect to any Tax, including any information return, claim for refund, amended
return or declaration of estimated Tax.
Section 3.15. Customers.
No customers have cancelled or otherwise terminated (other than at the end
of the stated term of their Contract with Jupiter or a Subsidiary of Jupiter) or
decreased materially, or made any written threat to Jupiter or any Subsidiary to
cancel or otherwise terminate or decrease materially, their relationship with
Jupiter or such Subsidiary or their usage of the services or products of Jupiter
or such Subsidiary, as the case may be, which cancellation, termination or
decrease would, individually or in the aggregate, have a Material Adverse Effect
on Jupiter.
Section 3.16. Opinion of Financial Advisor.
The Board of Directors of Jupiter has received the opinion of Morgan
Stanley & Co., Inc. ("Morgan Stanley") to the effect that, as of the date of
this Agreement, the Merger Consideration is fair to Jupiter's stockholders from
a financial point of view, and such opinion has not been revoked or modified in
any respect. A copy of the written opinion of Morgan Stanley to the foregoing
effect will be delivered to Media Metrix as soon as practicable after the date
of this Agreement.
Section 3.17. Takeover Laws.
Jupiter has taken all action required to be taken by it in order to exempt
this Agreement and the transactions contemplated hereby from, and this Agreement
is exempt from, the requirements of all applicable
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"moratorium," "control share", "fair price" and other anti-takeover Laws,
including Section 203 of the DGCL (collectively, "Takeover Laws").
Section 3.18. Required Vote of Jupiter Stockholders.
The affirmative vote of the holders of a majority of the Jupiter Shares
outstanding and entitled to vote at the Jupiter Meeting (as defined in Section
5.3) is required for the adoption (herein also sometimes referred to as
"approval") of this Agreement. No other vote of the stockholders of Jupiter is
required by Law, the certificate of incorporation or bylaws of Jupiter or
otherwise in order for Jupiter to consummate the Merger and the other
transactions contemplated hereby.
Section 3.19. Finders or Brokers.
Except for Morgan Stanley, a true and complete copy of whose engagement
agreement has been provided to Media Metrix, neither Jupiter nor any of its
Subsidiaries has employed any investment banker, broker, finder or intermediary
who might be entitled to any fee or any commission in connection with or upon
consummation of the Merger.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF MEDIA METRIX AND MERGER SUB
Media Metrix and Merger Sub represent and warrant to Jupiter that, except
as set forth in the corresponding sections or subsections of the Disclosure
Letter delivered to Jupiter by Media Metrix concurrently with entering into this
Agreement (the "Media Metrix Disclosure Letter") (all references to Media Metrix
in this Article IV being deemed to include reference to its predecessor, unless
the context otherwise requires):
Section 4.1. Organization, Qualification, Etc.
(a) Media Metrix is a corporation duly organized, validly existing and in
good standing under the Laws of the jurisdiction of its incorporation and has
the corporate power and authority to own its assets and to carry on its business
as it is now being conducted, and is duly qualified to do business and is in
good standing in each jurisdiction in which the ownership of its assets or the
conduct of its business requires such qualification, except for jurisdictions in
which such failure to be so qualified or to be in good standing would not,
individually or in the aggregate, have a Material Adverse Effect on Media
Metrix. The copies of Media Metrix's certificate of incorporation and bylaws
filed or incorporated by reference in Media Metrix's Annual Report on Form 10-K
for the year ended December 31, 1999 ("Media Metrix's 1999 Form 10-K") are
complete and correct and in full force and effect on the date hereof.
(b) Each of Media Metrix's Subsidiaries is an entity duly organized,
validly existing and in good standing (where applicable) under the Laws of its
jurisdiction of incorporation or organization, has the power and authority to
own its assets and to carry on its business as it is now being conducted, and is
duly qualified to do business and is in good standing in each jurisdiction in
which the ownership of its assets or the conduct of its business requires such
qualification, except for jurisdictions where the failure to be so organized,
existing, qualified or in good standing would not, individually or in the
aggregate, have a Material Adverse Effect on Media Metrix. All the outstanding
shares of capital stock of, or other ownership interests in, Media Metrix's
Subsidiaries are validly issued, fully paid and non-assessable and are owned by
Media Metrix, and such ownership is free and clear of all Encumbrances. There
are no existing Share Arrangements relating to the issued or unissued capital
stock or other securities of, or other ownership interests in, any Subsidiary of
Media Metrix. None of the certificates of incorporation or bylaws or other
organizational documents of any of Media Metrix's Subsidiaries purport to grant
rights to any person other than (1) customary rights with respect to corporate
governance given to all stockholders pro rata in accordance with their holdings
and (2) customary rights of indemnification of directors and officers. Media
Metrix has delivered to Jupiter complete and correct copies of the certificate
of incorporation and bylaws or other organizational documents of each of Media
Metrix's Subsidiaries.
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(c) A complete listing of Media Metrix's Subsidiaries is set forth in
Section 4.1(c) of the Media Metrix Disclosure Letter. Except as set forth in
Section 4.1(c) of the Media Metrix Disclosure Letter, Media Metrix does not
directly or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or similar
interest in, any corporation, partnership, joint venture, business association
or other person.
(d) Merger Sub has engaged in no business or other activities other than in
connection with the transactions contemplated hereby. Merger Sub is a wholly
owned Subsidiary of Media Metrix. The copies of Merger Sub's certificate of
incorporation and bylaws provided to Jupiter are complete and correct and are in
full force and effect on the date hereof.
Section 4.2. Capital Stock.
(a) The authorized stock of Media Metrix consists of 60,000,000 shares of
Media Metrix Common Stock and 5,000,000 shares of preferred stock, par value
$.01 per share (the "Media Metrix Preferred Stock"). As of June 22, 2000,
19,844,771 shares of Media Metrix Common Stock and no shares of Media Metrix
Preferred Stock were issued and outstanding and no shares of Media Metrix Common
Stock were held in treasury. All of the outstanding shares of Media Metrix
Common Stock have been validly issued and are fully paid and non-assessable, and
the shares of Media Metrix Common Stock to be issued in the Merger will, when
issued, be validly issued, fully paid and non-assessable. As of June 22, 2000,
there were no outstanding Share Arrangements relating to the issued or unissued
capital stock or other securities of, or other ownership interests in, Media
Metrix, other than options or rights to purchase an aggregate of 1,821,967
shares of Media Metrix Common Stock granted on or prior to such date as set
forth in Section 4.2(a) of the Media Metrix Disclosure Letter.
(b) Since June 22, 2000, there have been no increases to any of the amounts
set forth in Section 4.2(a), other than increases in the number of outstanding
shares of Media Metrix Common Stock by reason of issuances of shares of Media
Metrix Common Stock upon exercise of any of the options or rights set forth in
Section 4.2(a) of the Media Metrix Disclosure Letter, which issuances have
reduced the applicable number of options or rights set forth in Section 4.2(a)
of the Media Metrix Disclosure Letter by a corresponding amount, nor has Media
Metrix modified, amended or entered into new Share Arrangements relating to the
issued or unissued capital stock or other securities of, or other ownership
interests in, Media Metrix.
Section 4.3. Corporate Authority; No Violation.
(a) Media Metrix has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement and the performance by Media Metrix of its obligations
hereunder have been duly and validly authorized by the Board of Directors of
Media Metrix and, except for the approval of its stockholders of the Media
Metrix Stockholder Proposals (as defined in Section 5.3), no other corporate
proceedings on the part of Media Metrix are necessary to authorize this
Agreement or the transactions contemplated hereby. The Board of Directors of
Media Metrix, at a meeting duly called and held at which a quorum was present
throughout, has unanimously determined that the transactions contemplated by
this Agreement are in the best interest of Media Metrix and its stockholders and
to recommend to such stockholders that they vote in favor of the Media Metrix
Stockholder Proposals (the "Media Metrix Board Recommendation"). The Media
Metrix Board Recommendation has not been revoked or modified. This Agreement has
been duly and validly executed and delivered by Media Metrix and, assuming this
Agreement constitutes a valid and binding agreement of the other parties hereto,
constitutes a valid and binding agreement of Media Metrix, enforceable against
Media Metrix in accordance with its terms (except insofar as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar Laws affecting creditors' rights generally, or by principles governing
the availability of equitable remedies).
(b) The execution, delivery and performance of this Agreement by Media
Metrix does not, and the consummation by Media Metrix of the Merger and the
other transactions contemplated hereby will not, constitute or result in (with
or without notice, lapse of time or both) (i) a breach or violation of, or a
default under, or the creation of any rights in favor of any party under, the
certificate of incorporation or bylaws of
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Media Metrix or the comparable governing instruments of any of its Subsidiaries,
(ii) a breach or violation of, or a default under, or an acceleration of any
obligations under, or the creation of any Encumbrance on the assets of Media
Metrix or any of its Subsidiaries pursuant to, any Contract binding upon Media
Metrix or any of its Subsidiaries (each, a "Media Metrix Contract") or
(provided, as to consummation, the filings and notices are made, and approvals
are obtained, as referred to in Section 4.3(c)) any applicable Law or Decree or
governmental permit or license to which Media Metrix or any of its Subsidiaries
is subject, or (iii) any change in the rights or obligations of any party under
any of the Media Metrix Contracts, except for any breach, violation, default,
acceleration, creation of rights or Encumbrances or change that would not,
individually or in the aggregate, have a Material Adverse Effect on Media
Metrix.
(c) Other than in connection with or in compliance with the provisions of
the Securities Act, the Exchange Act, the HSR Act, and the securities or blue
sky Laws of the various states and other than the filing of the Certificate of
Merger with the Delaware Secretary of State, no authorization, consent or
approval of, or filing with, any Governmental Entity is necessary for the
consummation by Media Metrix of the transactions contemplated by this Agreement,
except for such authorizations, consents, approvals or filings that, if not
obtained or made, would not, individually or in the aggregate, have a Material
Adverse Effect on Media Metrix.
Section 4.4. Reports and Financial Statements.
Media Metrix has timely filed with the SEC all forms, reports, schedules,
statements and other documents required to be filed by it since May 6, 1999
under the Securities Act or the Exchange Act (such documents, as supplemented or
amended since the time of filing, the "Media Metrix SEC Reports"). As of their
respective dates, the Media Metrix SEC Reports, including any financial
statements or schedules included or incorporated by reference therein, at the
time filed (and, in the case of registration statements and proxy statements, on
the dates of effectiveness and the dates of mailing, respectively) (i) complied
in all material respects with the applicable requirements of the Securities Act
and the Exchange Act (including requirements as to the filing of Exhibits), and
(ii) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and unaudited
consolidated interim financial statements included or incorporated by reference
in the Media Metrix SEC Reports (including any related notes and schedules)
fairly present, in all material respects, the financial position of Media Metrix
and its consolidated Subsidiaries as of the dates thereof and the results of
their operations and their cash flows and other information included therein for
the periods set forth therein, in each case in accordance with GAAP consistently
applied during the periods involved (except as otherwise disclosed in the notes
thereto) and subject, in the case of the interim financial statements, to normal
year-end adjustments that would not, individually or in the aggregate, be
material in amount or effect.
Section 4.5. No Undisclosed Liabilities.
Neither Media Metrix nor any of its Subsidiaries has any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise (and
whether or not the subject of any other representation or warranty hereunder),
except (a) liabilities or obligations reserved against or disclosed in the
unaudited consolidated interim financial statements of Media Metrix as of and
for the three months ended March 31, 2000 contained in Media Metrix's Quarterly
Report on Form 10-Q for the quarter ended March 31, 2000 ("Media Metrix's First
Quarter 2000 Form 10-Q") or disclosed in the footnotes thereto or in the
footnotes to the audited consolidated financial statements of Media Metrix as of
and for the fiscal year ended December 31, 1999 included in Media Metrix's 1999
Form 10-K or otherwise disclosed in Media Metrix's First Quarter 2000 Form 10-Q
or Media Metrix's 1999 Form 10-K (other than the financial statements contained
therein) (in each case, in the amount or of the magnitude so reserved against or
disclosed), and (b) liabilities or obligations which would not, individually or
in the aggregate, have a Material Adverse Effect on Media Metrix.
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Section 4.6. Compliance with Laws.
Media Metrix and each of its Subsidiaries each:
(a) conducts its businesses in compliance with all federal, state,
local and foreign Laws applicable thereto or to its Employees;
(b) is not subject to any Decrees;
(c) has all permits, licenses, authorizations, orders and approvals
of, and has made all filings, applications and registrations with, all
Governmental Entities that are required in order to permit it to conduct
its businesses substantially as presently conducted; all such permits,
licenses, authorizations, orders and approvals are in full force and effect
and, to Media Metrix's knowledge, no suspension or cancellation of any of
them is threatened; and
(d) has received, since December 31, 1998, no notification or
communication from any Governmental Entity (i) asserting that it is not in
compliance with any Laws or Decrees, (ii) threatening to revoke any permit,
license, authorization, order or approval, or (iii) failing to approve any
proposed acquisition, or stating the intention not to approve any
acquisition proposed to be effected by it within a certain time period or
indefinitely;
except where the failure of any of the foregoing to be true would not,
individually or in the aggregate, have a Material Adverse Effect on Media
Metrix.
Section 4.7. Employee Benefit Plans.
(a) Section 4.7 of the Media Metrix Disclosure Letter contains a complete
list of (i) all bonus, vacation, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock and stock option, incentive, severance or
change-in-control plans or other similar Contracts, (ii) all employment
Contracts, (iii) all medical, dental, disability, health and life insurance
plans or other Contracts, and (iv) all other employee benefit and fringe benefit
plans or other Contracts, in the case of each of (i) through (iv) maintained or
contributed to by Media Metrix or any of its Subsidiaries for the benefit of any
of their Employees or the beneficiaries of any of the foregoing, or pursuant to
which Media Metrix or any of its Subsidiaries may have any liability
(collectively, the "Media Metrix Compensation and Benefit Plans"), but excluding
for scheduling purposes any Media Metrix Compensation and Benefit Plan which is
not material.
(b) Media Metrix has provided or will promptly after the date hereof
provide to Jupiter copies of all Media Metrix Compensation and Benefit Plans
listed on Section 4.7 of the Media Metrix Disclosure Letter, including all
amendments thereto, and, with respect to each of the Media Metrix Compensation
and Benefit Plans, as applicable, the trust documents, determination, opinion
and notification letters issued by the Internal Revenue Service, summary plan
descriptions, employee booklets, most recent nondiscrimination tests, most
recent annual reports (Form 5500), COBRA forms and notices, correspondence or
inquiries by the Internal Revenue Service or the Department of Labor, material
written Contracts, including administrative service agreements, group annuity
contracts and group insurance contracts, and material employee communications,
and all of such copies are true and correct.
(c) Each Media Metrix Compensation and Benefit Plan has been and is being
administered in accordance with the terms thereof and all applicable Law except
where the failure to do so would not, individually or in the aggregate, have a
Material Adverse Effect on Media Metrix. Each Media Metrix Compensation and
Benefit Plan which is an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA (each such plan, a "Media Metrix Pension Plan") and is
intended to be qualified under Section 401(a) of the Code is so qualified and
has received a favorable determination letter (or opinion or notification
letter, if applicable) from the Internal Revenue Service or there is a period of
time remaining under applicable Internal Revenue Service regulations or
pronouncements in which to apply for such a letter and make any amendments
necessary to obtain a favorable determination as to the qualified status of each
such Media Metrix Pension Plan, and Media Metrix is not aware of any
circumstances which could result in the revocation or denial of any such
favorable determination letter. To Media Metrix's knowledge, no
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"prohibited transaction," within the meaning of Section 4975 of the Code or
Section 406 of ERISA, has occurred with respect to any Media Metrix Compensation
and Benefit Plan that could result in liability to Media Metrix or any of its
Subsidiaries. There is no pending or, to Media Metrix's knowledge, threatened
Litigation relating to the employment, termination of employment, compensation
or employee benefits of any Employee of Media Metrix or any of its Subsidiaries
which, if determined adversely to Media Metrix or any of its Subsidiaries,
would, individually or in the aggregate, have a Material Adverse Effect on Media
Metrix.
(d) No Media Metrix Compensation and Benefit Plan promises or provides
retiree medical or other retiree welfare benefits to any person, other than
health continuation coverage as required by Section 4980B of the Code or Part 6
of Title I of ERISA.
(e) No material liability under Title IV of ERISA has been or is reasonably
expected to be incurred by Media Metrix or any of its Subsidiaries or any entity
which is considered one employer with Media Metrix under Section 4001(a)(15) of
ERISA or Section 414 of the Code (any such entity, a "Media Metrix ERISA
Affiliate"), other than such liabilities that have been previously satisfied.
(f) All contributions, premiums and payments required to be made under the
terms of any Media Metrix Compensation and Benefit Plan have been made, except
where the failure to do so would not, individually or in the aggregate, have a
Material Adverse Effect on Media Metrix. Neither any Media Metrix Pension Plan
nor any single-employer plan of a Media Metrix ERISA Affiliate is a "defined
benefit plan" within the meaning of Section 3(35) of ERISA.
(g) Neither Media Metrix nor any of its Subsidiaries contributes to or is
required to contribute to, or has ever contributed to or been required to
contribute to, any Multiemployer Plan.
(h) The execution of, and performance of the transactions contemplated in,
this Agreement will not (either alone or upon the occurrence of any additional
or subsequent events) (i) constitute an event under any Media Metrix
Compensation and Benefit Plan, trust or loan that will or may result in any
payment (whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any Employee, (ii) result in the triggering or
imposition of any material restrictions or limitations on the ability of any
Media Metrix Compensation and Benefit Plan to be amended or terminated in
accordance with its terms as in effect on the date hereof or (iii) result in any
payment or benefit that will or may be made by Media Metrix, any of its
Subsidiaries, Jupiter or any of their respective affiliates that will be
characterized as an "excess parachute payment" within the meaning of Section
280G(b)(1) of the Code.
(i) In the event that any individual is classified by Media Metrix or any
of its Subsidiaries as a non-employee (such as an independent contractor, leased
employee, consultant or special consultant) and is later reclassified as an
employee upon governmental or judicial review, notwithstanding such
reclassification, no such individual shall be eligible to participate in any
Media Metrix Compensation and Benefit Plan, except where such eligibility would
not, individually or in the aggregate, have a Material Adverse Effect on Media
Metrix.
(j) The contributions of Media Metrix and its Subsidiaries to any trust
described in Section 501(c)(9) of the Code have complied with Section 419A of
the Code (if applicable).
Section 4.8. Absence of Certain Changes or Events.
Since March 31, 2000, (a) the businesses of Media Metrix and its
Subsidiaries have been conducted in all material respects in the ordinary course
consistent with past practice, (b) Media Metrix and its Subsidiaries have not
engaged in any material transaction or series of related transactions other than
in the ordinary course consistent with past practice, (c) there has not been any
event, occurrence or development, alone or taken together with all other
existing facts, that, individually or in the aggregate, would have a Material
Adverse Effect on Media Metrix, and (d) neither Media Metrix nor any of its
Subsidiaries has taken, or failed to take, any action which, if taken or failed
to be taken on or after the date hereof, would constitute a breach of Section
5.1(b).
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Section 4.9. Litigation.
There is no Litigation pending, or, to Media Metrix's knowledge,
threatened, against or affecting Media Metrix or any of its Subsidiaries or any
of their respective properties, at law or in equity or before any Governmental
Entity, which, if determined adversely to Media Metrix or such Subsidiary,
would, individually or in the aggregate, have a Material Adverse Effect on Media
Metrix.
Section 4.10. Title to Assets.
Media Metrix and its Subsidiaries own or hold under valid leases all the
assets necessary for the conduct of their businesses as presently conducted,
except where the failure to own or hold such assets would not, individually or
in the aggregate, have a Material Adverse Effect on Media Metrix.
Section 4.11. Intellectual Property.
(a) Section 4.11(a) of the Media Metrix Disclosure Letter contains a true
and complete list of all patents, patent applications, registered trademarks,
trademark applications, trademarks, trade names, registered service marks,
service mark applications, service marks, Internet domain name registrations,
copyrights, copyright applications and copyright registrations of Media Metrix
or any of its Subsidiaries and all other applications, filings and formal
actions made or taken pursuant to Law by Media Metrix or any of its Subsidiaries
to protect its interests in Media Metrix Intellectual Property (as hereinafter
defined).
(b) All of the material Media Metrix Intellectual Property which are
licenses, sublicenses, permissions or other Contracts ("Media Metrix
Intellectual Property Licenses"), and the parties, date and term of each Media
Metrix Intellectual Property License are set forth in Section 4.11(b) of the
Media Metrix Disclosure Letter.
(c) With respect to each item of the Media Metrix Intellectual Property
(including the Intellectual Property Rights set forth in Sections 4.11(a) and
(b) of the Media Metrix Disclosure Letter) either (i) Media Metrix or an
affiliate of Media Metrix is the sole and exclusive owner of, with all right,
title and interest in and to (free and clear of any Encumbrances), such item of
Media Metrix Intellectual Property or (ii) Media Metrix has full and
unencumbered rights to use such item of Media Metrix Intellectual Property
pursuant to a valid and enforceable Media Metrix Intellectual Property License
(and is not contractually obligated to grant any rights or make any royalty or
other payments to any third party in respect thereof). The Media Metrix
Intellectual Property includes all of the Intellectual Property Rights that are
necessary for the conduct of the businesses of Media Metrix and its Subsidiaries
as currently conducted or currently contemplated to be conducted.
(d) There is no pending or, to Media Metrix's knowledge, threatened
Litigation (i) challenging the validity, effectiveness, legality, use,
enforceability or ownership by Media Metrix or any of its Subsidiaries of any
Media Metrix Intellectual Property or (ii) to the effect that Media Metrix or
any of its Subsidiaries, the continued operation of their businesses as
currently conducted and as currently contemplated to be conducted, or any of the
Media Metrix Intellectual Property or the exercise of any rights therein,
infringes, interferes with, misappropriates or otherwise comes into conflict
with any Intellectual Property Right of any person which, if determined
adversely to Media Metrix or such Subsidiary, would, individually or in the
aggregate, have a Material Adverse Effect on Media Metrix, nor are there any
valid grounds for any bona fide claim of any such kind. All items of Media
Metrix Intellectual Property are enforceable, valid, subsisting and in full
force and effect, except where the failure of any of the foregoing to be true
would not, individually or in the aggregate, have a Material Adverse Effect on
Media Metrix. To Media Metrix's knowledge, there is no unauthorized use,
infringement or misappropriation of, or any interference or conflict with, any
Media Metrix Intellectual Property by any person, including any Employee of
Media Metrix or any Subsidiary.
(e) All Employees, agents and contractors who have contributed to or
participated in the conception and development of Media Metrix Intellectual
Property on behalf of Media Metrix or any of its Subsidiaries, have executed (i)
nondisclosure agreements and (ii) have been a party to enforceable and
appropriate instruments of assignment (including work for hire agreements with
respect to any copyrights) in favor of Media Metrix or one of its Subsidiaries
in accordance with applicable Law that have conveyed to Media Metrix or one of
its
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Subsidiaries full, effective, exclusive and original ownership in and to all
Intellectual Property Rights arising from the efforts of such personnel.
(f) Neither the execution, delivery and performance of this Agreement nor
the consummation of the transactions contemplated hereby will cause the
diminution, termination or forfeiture of or otherwise alter or impair any rights
or interests of Media Metrix or any of its Subsidiaries in and to any of the
Media Metrix Intellectual Property which would, individually or in the
aggregate, have a Material Adverse Effect on Media Metrix.
(g) The term "Media Metrix Intellectual Property" shall mean all
Intellectual Property Rights which are used or are proposed to be used in
connection with the conduct of the business of Media Metrix or any of its
Subsidiaries as currently conducted or currently contemplated to be conducted,
and shall include any such Intellectual Property Rights which are owned by any
affiliate of Media Metrix.
Section 4.12. Material Contracts.
Neither Media Metrix nor any of its Subsidiaries nor any other party is in
breach of or in default under any Media Metrix Contract except for such breaches
and defaults which would not, individually or in the aggregate, have a Material
Adverse Effect on Media Metrix. Neither Media Metrix nor any of its Subsidiaries
is party to any Contract containing any provision or covenant limiting in any
material respect the ability of Media Metrix or any of its Subsidiaries to (a)
sell any products or service of or to any other person, (b) engage in any line
of business or (c) compete with or to obtain products or services from any
person, or limiting the ability of any person to provide products or services to
Media Metrix or any of its Subsidiaries.
Section 4.13. Labor Matters.
Media Metrix and its Subsidiaries do not have any labor Contracts
(including any collective bargaining agreements) with any persons employed by
Media Metrix or any of its Subsidiaries or any persons otherwise performing
services primarily for Media Metrix or any of its Subsidiaries, nor is Media
Metrix or any of its Subsidiaries in the process of negotiating any such
Contract. There is no labor strike, dispute or stoppage pending or, to Media
Metrix's knowledge, threatened against Media Metrix or any of its Subsidiaries
which, individually or in the aggregate, would have a Material Adverse Effect on
Media Metrix. Neither Media Metrix nor any of its Subsidiaries is the subject of
any Litigation asserting that it has committed an unfair labor practice (within
the meaning of the National Labor Relations Act) which Litigation, if determined
adversely to Media Metrix or such Subsidiary, would, individually or in the
aggregate, have a Material Adverse Effect on Media Metrix, or any Litigation
seeking to compel it to bargain with any labor organization as to wages and
conditions of employment. There are, to Media Metrix's knowledge, no
organizational efforts currently being made involving any of the employees of
Media Metrix or any of its Subsidiaries.
Section 4.14. Tax Matters.
(a) Media Metrix and each of its Subsidiaries have (i) filed all federal,
state, local and foreign Tax Returns required to be filed by them (taking into
account extensions), (ii) paid or accrued all Taxes shown to be due on such
Returns or which are otherwise due and payable and (iii) paid or accrued all
Taxes for which a notice of assessment or collection has been received, except,
in the case of clause (i), (ii) or (iii), for any such filings, payments or
accruals which would not, individually or in the aggregate, have a Material
Adverse Effect on Media Metrix. Neither the Internal Revenue Service nor any
other taxing authority has asserted in writing any claim for Taxes, or to Media
Metrix's knowledge, is threatening to assert any claims for Taxes, against Media
Metrix or any of its Subsidiaries which claims, if determined adversely to Media
Metrix or such Subsidiary, would, individually or in the aggregate, have a
Material Adverse Effect on Media Metrix. Media Metrix and each of its
Subsidiaries have withheld or collected and paid over to the appropriate
Governmental Entities (or are properly holding for such payment) all Taxes
required by Law to be withheld or collected. There are no outstanding Contracts
extending or waiving the statutory period of limitation applicable to any
material Tax Return of Media Metrix or any of its Subsidiaries. Neither Media
Metrix nor any of its Subsidiaries has made an election under Section 341(f) of
the Code. There are no Encumbrances for Taxes upon the assets of Media Metrix or
any of its Subsidiaries, other than Encumbrances for Taxes that are not yet due,
Encumbrances that are being contested in good faith in accordance with
applicable law and disclosed in
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Section 4.14(a) of the Media Metrix Disclosure Letter and Encumbrances which
would not, individually or in the aggregate, have a Material Adverse Effect on
Media Metrix. Neither Media Metrix nor any of its Subsidiaries (i) has any
liability under Treasury Regulation Section 1.1502-6 or analogous state, local
or foreign Law for any Taxes, other than for Taxes of Media Metrix or its
Subsidiaries or (ii) is a party to a Tax sharing or Tax indemnity Contract or
any other Contract of a similar nature with any entity other than Media Metrix
or any of its Subsidiaries that remains in effect. No claim has been made in
writing by a taxing authority in a jurisdiction where Media Metrix or any of its
Subsidiaries does not file Tax Returns that Media Metrix or any of its
Subsidiaries is or may be subject to taxation by that jurisdiction where such
claim, if determined adversely to Media Metrix or such Subsidiary, would,
individually or in the aggregate, have a Material Adverse Effect on Media
Metrix. Neither Media Metrix nor any of its Subsidiaries is the subject of any
currently ongoing audit or examination with respect to Taxes, nor, to Media
Metrix's knowledge, has any such audit been threatened or proposed by any taxing
authority.
(b) Media Metrix does not know of any fact relating to Media Metrix or its
stockholders that could reasonably be expected to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code.
Section 4.15. Customers.
No customers have cancelled or otherwise terminated (other than at the end
of the stated term of their Contract with Media Metrix or a Subsidiary of Media
Metrix) or decreased materially, or made any written threat to Media Metrix or
any Subsidiary to cancel or otherwise terminate or decrease materially, their
relationship with Media Metrix or such Subsidiary or their usage of the services
or products of Media Metrix or such Subsidiary, as the case may be, which
cancellation, termination or decrease would, individually or in the aggregate,
have a Material Adverse Effect on Media Metrix.
Section 4.16. Opinion of Financial Advisor.
The Board of Directors of Media Metrix has received the opinion of Thomas
Weisel Partners LLC ("Thomas Weisel") to the effect that, as of the date of this
Agreement, the Merger Consideration is fair to Media Metrix from a financial
point of view, and such opinion has not been revoked or modified in any respect.
A copy of the written opinion of Thomas Weisel to the foregoing effect will be
delivered to Jupiter as soon as practicable after the date of this Agreement.
Section 4.17. Takeover Laws.
Media Metrix has taken all action required to be taken by it in order to
exempt this Agreement and the transactions contemplated hereby from, and this
Agreement is exempt from, the requirements of all applicable Takeover Laws.
Section 4.18. Required Vote of Media Metrix Stockholders.
The affirmative vote of the holders of a majority of the outstanding shares
]of Media Metrix Common Stock entitled to vote is required to approve the
proposed amendment to Media Metrix's certificate of incorporation to increase
the number of authorized shares of Media Metrix Common Stock, and the
affirmative vote of the holders of a majority of the total number of shares of
Media Metrix Common Stock present in person or by proxy and entitled to vote at
the Media Metrix Meeting (as defined in Section 5.3) is required to approve the
issuance of shares of Media Metrix Common Stock in the Merger. No other vote of
the stockholders of Media Metrix is required by Law, the certificate of
incorporation or bylaws of Media Metrix or otherwise in order for Media Metrix
to consummate the Merger and the other transactions contemplated hereby.
Section 4.19. Finders or Brokers.
Except for Thomas Weisel, a true and complete copy of whose engagement
agreement has been provided to Jupiter, neither Media Metrix nor any of its
Subsidiaries has employed any investment banker, broker, finder or intermediary
who might be entitled to any fee or any commission in connection with or upon
consummation of the Merger.
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ARTICLE V
COVENANTS AND AGREEMENTS
Media Metrix and Merger Sub on the one hand and Jupiter on the other hand
hereby covenant and agree with one another as follows:
Section 5.1. Conduct of Business by Jupiter and Media Metrix.
During the period between the date hereof and the Effective Time, except as
may otherwise be consented to in writing by Media Metrix (in the case of Section
5.1(a)) or Jupiter (in the case of Section 5.1(b)) (which consent in each case
shall not be unreasonably withheld) or as may be expressly permitted pursuant to
this Agreement or as set forth in Section 5.1 of the Jupiter Disclosure Letter
or Section 5.1 of the Media Metrix Disclosure Letter, as applicable:
(a) Jupiter shall, and shall cause each of its Subsidiaries to,
conduct its operations in the ordinary and usual course of business in
substantially the same manner as heretofore conducted and use its
reasonable best efforts to preserve intact its business organization and
goodwill in all material respects, keep available the services of its
officers and employees as a group, subject to changes in the ordinary
course, and maintain its existing relationships with suppliers,
distributors, customers and others having business relationships with it.
Without limiting the generality of the foregoing, Jupiter shall not, and
shall cause its Subsidiaries not to, (i) authorize, declare, set aside or
pay any dividends on, or make any distribution with respect to, its
outstanding shares of stock, except that (1) wholly owned domestic
Subsidiaries of Jupiter may pay dividends or make distributions of cash to
Jupiter or another wholly owned domestic Subsidiary of Jupiter and (2)
wholly owned foreign Subsidiaries of Jupiter may pay dividends to Jupiter
or other wholly owned Subsidiaries of Jupiter so long as such dividends do
not have adverse Tax consequences to Jupiter or any of its Subsidiaries;
(ii) (x) enter into or amend any employment, severance, change-in-control
or similar Contracts with, or (y) except in the ordinary course of business
consistent with past practice, grant any bonus or salary increases or
otherwise increase the compensation or benefits provided to any of their
respective Employees; provided, however, that any of the actions set forth
in clause (y) hereof with respect to any director of Jupiter or any of its
Subsidiaries or any officer of Jupiter or any of its Subsidiaries set forth
in Section 5.1(a)(ii) of the Jupiter Disclosure Letter shall in all cases
require Media Metrix's prior written consent; (iii) (other than the Merger
or as expressly permitted by Section 5.7) authorize, or announce an
intention to authorize, or enter into a Contract with respect to, or take
any action to consummate any Contract with respect to (1) any merger,
consolidation or business combination, (2) any liquidation, dissolution,
restructuring, recapitalization, reorganization, stock split, reverse stock
split or other change to its authorized capitalization, or (3) any
acquisition or disposition of a material amount of assets or securities or
any release or relinquishment of any material rights; (iv) propose or adopt
any amendments to its certificate of incorporation or bylaws; (v) issue,
sell or otherwise dispose of, or create any Encumbrance on, any capital
stock owned by it in any of its Subsidiaries; (vi) issue, sell or otherwise
permit to become outstanding any shares of its capital stock, except, in
the case of Jupiter, upon exercise of Jupiter Options outstanding on the
date hereof and in the amount set forth in Section 3.2 or as required by
the convertible preferred note, or redeem, repurchase or otherwise acquire
any shares of its capital stock; (vii) grant or award any options,
warrants, conversion rights or other rights to acquire any shares of
capital stock of Jupiter or any of its Subsidiaries, or enter into any
other Share Arrangement relating to such capital stock; (viii) amend the
terms of any Jupiter Compensation and Benefit Plan, including any of the
Jupiter Plans, or adopt any new employee benefit plan or other related
Contract other than as contemplated by Section 2.5; (ix) except pursuant to
existing credit agreements disclosed to Media Metrix in the Jupiter
Disclosure Letter, on the terms in effect on the date hereof, incur,
create, assume or otherwise become liable for any indebtedness for borrowed
money; (x) except in the ordinary course of business consistent with past
practice, transfer, lease, license, mortgage, pledge or create any other
Encumbrance on any other material asset or material amount of assets; (xi)
make any material Tax election or settle or compromise any material Tax
liability or take any action which could reasonably be expected to cause
the Merger to fail to qualify as a reorganization within the meaning of
Section 368(a) of the Code; (xii) incur or commit to any capital
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expenditure, individually or in the aggregate, in excess of $12,000,000;
(xiii) enter into any Contract containing any provision or covenant
limiting the ability of Jupiter or any Subsidiary to (A) sell any products
or services of or to any other person, (B) engage in any line of business
or (C) compete with or obtain products or services from any person, or
limiting the ability of any person to provide products or services to
Jupiter or any of its Subsidiaries; (xiv) implement or adopt any change in
its accounting principles, practices or methods, other than as may be
required by GAAP or Regulation S-X promulgated under the Exchange Act; (xv)
settle any material Litigation against Jupiter; or (xvi) agree or commit to
do anything prohibited by this Section 5.1(a).
(b) Media Metrix shall, and shall cause each of its Subsidiaries to,
conduct its operations in the ordinary and usual course of business in
substantially the same manner as heretofore conducted and use its
reasonable best efforts to preserve intact its business organization and
goodwill in all material respects, keep available the services of its
officers and employees as a group, subject to changes in the ordinary
course, and maintain its existing relationships with suppliers,
distributors, customers and others having business relationships with it.
Without limiting the generality of the foregoing, Media Metrix shall not,
and shall cause its Subsidiaries not to, (i) authorize, declare, set aside
or pay any dividends on, or make any distribution with respect to, its
outstanding shares of stock, other than a dividend or distribution of stock
for which there would be an adjustment in the Exchange Ratio pursuant to
Section 2.1(e); except that (1) wholly owned domestic Subsidiaries of Media
Metrix may pay dividends or make distributions of cash to Media Metrix or
another wholly owned domestic Subsidiary of Media Metrix and (2) wholly
owned foreign Subsidiaries of Media Metrix may pay dividends to Media
Metrix or other wholly owned Subsidiaries of Media Metrix so long as such
dividends do not have adverse Tax consequences to Media Metrix or any of
its Subsidiaries; (ii) (x) enter into or amend any employment, severance,
change-in-control or similar Contracts with, or (y) except in the ordinary
course of business consistent with past practice, grant any bonus or salary
increases or otherwise increase the compensation or benefits provided to
any of their respective Employees; provided, however, that any of the
actions set forth in clause (y) hereof with respect to any director of
Media Metrix or any of its Subsidiaries or any officer of Media Metrix or
any of its Subsidiaries set forth in Section 5.1(b)(ii) of the Media Metrix
Disclosure Letter shall in all cases require Jupiter's prior written
consent; (iii) (other than the Merger or as expressly permitted by Section
5.7) authorize, or announce an intention to authorize, or enter into a
Contract with respect to, or take any action to consummate any Contract
with respect to (1) any merger, consolidation or business combination, (2)
any liquidation, dissolution, restructuring, recapitalization,
reorganization, stock split, reverse stock split or other change to its
authorized capitalization, other than any subdivision, split or combination
for which there would be an adjustment in the Exchange Ratio pursuant to
Section 2.1(e), or (3) any acquisition or disposition of a material amount
of assets or securities or any release or relinquishment of any material
rights; (iv) propose or adopt any amendments to its certificate of
incorporation or bylaws; (v) issue, sell or otherwise dispose of, or create
any Encumbrance on, any capital stock owned by it in any of its
Subsidiaries; (vi) issue, sell or otherwise permit to become outstanding
any shares of its capital stock, except, in the case of Media Metrix, upon
exercise of Media Metrix Options outstanding on the date hereof and in the
amount set forth in Section 4.2, or redeem, repurchase or otherwise acquire
any shares of its capital stock; (vii) grant or award any options,
warrants, conversion rights or other rights to acquire any shares of
capital stock of Media Metrix or any of its Subsidiaries, or enter into any
other Share Arrangement relating to such capital stock; (viii) amend the
terms of any Media Metrix Compensation and Benefit Plan or adopt any new
employee benefit plan or other related Contract other than as contemplated
by Section 2.5; (ix) except pursuant to existing credit agreements
disclosed to Jupiter in the Media Metrix Disclosure Letter, on the terms in
effect on the date hereof, incur, create, assume or otherwise become liable
for any indebtedness for borrowed money; (x) except in the ordinary course
of business consistent with past practice, transfer, lease, license,
mortgage, pledge or create any other Encumbrance on any other material
asset or material amount of assets; (xi) make any material Tax election or
settle or compromise any material Tax liability or take any action which
could reasonably be expected to cause the Merger to fail to qualify as a
reorganization within the meaning of Section 368(a) of the Code; (xii)
incur or commit to any capital expenditure, individually or in the
aggregate, in excess of $20,000,000; (xiii) enter into any Contract
containing any
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provision or covenant limiting the ability of Media Metrix or any
Subsidiary to (A) sell any products or services of or to any other person,
(B) engage in any line of business or (C) compete with or obtain products
or services from any person, or limiting the ability of any person to
provide products or services to Media Metrix or any of its Subsidiaries;
(xiv) implement or adopt any change in its accounting principles, practices
or methods, other than as may be required by GAAP or Regulation S-X
promulgated under the Exchange Act; (xv) settle any material Litigation
against Media Metrix; or (xvi) agree or commit to do anything prohibited by
this Section 5.1(b).
Section 5.2. Investigation.
During the period between the date hereof and the Effective Time, each of
Jupiter and Media Metrix shall afford to one another and to one another's
officers, employees, accountants, counsel and other authorized representatives
full access, during normal business hours, to its and its Subsidiaries' (a)
properties, Contracts, books and records (including but not limited to Tax
Returns and accountants' work papers), (b) any report, schedule or other
document filed or received by it pursuant to the requirements of federal or
state securities Laws and (c) any other information concerning its business,
properties and personnel as the other may reasonably request; provided, however,
that no investigation pursuant to this Section 5.2 shall affect or be deemed to
modify any representation or warranty made by Jupiter, Media Metrix or Merger
Sub herein. The parties hereby agree that each of them will treat any such
information in accordance with the applicable Confidentiality Agreement between
Jupiter and Media Metrix (each, a "Confidentiality Agreement"). Notwithstanding
any provision of this Agreement to the contrary, no party shall be obligated to
make any disclosure in violation of applicable Laws or if disclosure would cause
a breach of any confidentiality provision in any Contract or a forfeiture of
attorney-client privilege. Jupiter and Media Metrix will make appropriate
substitute disclosure arrangements if the circumstances of the preceding
sentence apply.
Section 5.3. Stockholder Approval; Filings.
(a) Subject to the terms and conditions contained herein, (i) Jupiter shall
submit this Agreement for approval to the holders of Jupiter Shares at a meeting
to be duly held for this purpose by Jupiter (the "Jupiter Meeting"), and (ii)
Media Metrix shall submit the proposed amendment to its certificate of
incorporation to increase the number of authorized shares of Media Metrix Common
Stock and the proposed issuance of Media Metrix Common Stock in the Merger (the
matters submitted, the "Media Metrix Stockholder Proposals") for approval to the
holders of shares of Media Metrix Common Stock at a meeting to be duly held for
this purpose by Media Metrix (the "Media Metrix Meeting"; the Media Metrix
Meeting and the Jupiter Meeting are each sometimes referred to herein as a
"Stockholders Meeting"). Jupiter and Media Metrix shall take all action in
accordance with the federal securities Laws, the DGCL and their respective
certificates of incorporation and bylaws necessary to duly convene the Jupiter
Meeting and the Media Metrix Meeting. Jupiter and Media Metrix shall coordinate
and cooperate with respect to the timing of such meetings and shall use their
reasonable best efforts to hold such meetings on the same day and as soon as
reasonably practicable after the date hereof. Subject to the provisions of
Section 5.7, the Joint Proxy Statement (as defined below) shall include the
Jupiter Board Recommendation and the Media Metrix Board Recommendation (each a
"Recommendation"). Jupiter and Media Metrix shall use their reasonable best
efforts to take all lawful action to solicit the requisite approval by their
respective stockholders. Notwithstanding any withdrawal, modification or change
in the Jupiter Board Recommendation, Jupiter agrees to hold its Stockholders
Meeting in accordance with the provisions of this Section 5.3(a), and,
notwithstanding any withdrawal, modification or change in the Media Metrix Board
Recommendation, Media Metrix agrees to hold its Stockholders Meeting in
accordance with the provisions of this Section 5.3(a).
(b) Each of Media Metrix and Jupiter agrees to cooperate in the preparation
of a registration statement on Form S-4 (the "Registration Statement") to be
filed by Media Metrix with the SEC in connection with the issuance of Media
Metrix Common Stock in the Merger (including the joint proxy statement and other
proxy solicitation materials of Media Metrix and Jupiter constituting a part
thereof (the "Joint Proxy Statement") and all related documents). Provided
Jupiter has cooperated as required above, Media Metrix agrees to file the
Registration Statement with the SEC as promptly as practicable after the date
hereof. Each of Jupiter and Media Metrix agrees to use its reasonable best
efforts to cause the Registration Statement to be
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declared effective under the Securities Act as promptly as practicable after the
filing thereof, and to cause the Joint Proxy Statement to be mailed as promptly
as practicable after the Registration Statement shall have become effective to
the stockholders of Jupiter and the stockholders of Media Metrix. Media Metrix
also agrees to use its reasonable best efforts to obtain all necessary state
securities Law or "blue sky" permits and approvals required to carry out the
transactions contemplated by this Agreement. Media Metrix and Jupiter each agree
to furnish the other all information concerning itself and its Subsidiaries,
officers, directors and stockholders as may be reasonably requested by the other
in connection with the foregoing.
(c) Each of Jupiter and Media Metrix agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in the Registration Statement or any
amendment or supplement to the Registration Statement will, (i) at the time the
Registration Statement and each amendment or supplement thereto, if any, is
filed with the SEC, (ii) at the time the Registration Statement becomes
effective under the Securities Act or (iii) at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated in the Registration Statement or necessary in order to make the
statements in the Registration Statement, in light of the circumstances under
which they were made, not misleading. Each of Jupiter and Media Metrix agrees,
as to itself and its Subsidiaries, that none of the information supplied or to
be supplied by it for inclusion or incorporation by reference in the Joint Proxy
Statement or any amendment or supplement to the Joint Proxy Statement will, at
the time the Joint Proxy Statement is first mailed to the respective
stockholders of Jupiter and Media Metrix, and at the time of the Jupiter Meeting
and of the Media Metrix Meeting, contain any statement which, at such time and
in light of the circumstances under which it was made, is false or misleading
with respect to any material fact, or which omits to state any material fact
necessary in order to make the statements made in the Joint Proxy Statement not
false or misleading or necessary to correct any statement made by such company
in any earlier communication by such company with respect to the solicitation of
proxies for the Jupiter Meeting or the Media Metrix Meeting, as the case may be,
which has become false or misleading. Each of Jupiter and Media Metrix further
agrees that if it shall become aware prior to the time of the Jupiter Meeting or
of the Media Metrix Meeting of any information that would cause any of the
statements in the Registration Statement or Joint Proxy Statement or any
amendment or supplement thereto to be false or misleading with respect to any
material fact, or to omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading, to
promptly inform the other party thereof and to take the necessary steps to
correct such document.
(d) Media Metrix will advise Jupiter, promptly after Media Metrix receives
notice thereof, of the time when the Registration Statement has become effective
or any supplement or amendment has been filed, of the issuance of any stop order
or the suspension of the qualification of the Media Metrix Common Stock for
offering or sale in any jurisdiction, of the initiation or threat of any
proceeding for any such purpose, or of any request by the SEC for the amendment
or supplement of the Registration Statement or for additional information.
(e) Promptly after the execution of this Agreement, Media Metrix shall
prepare and file with the Nasdaq Stock Market, Inc. listing applications for the
listing of securities on the Nasdaq covering the shares of Media Metrix Common
Stock issuable in the Merger or upon exercise of the Media Metrix Exchange
Options, and use its reasonable best efforts to obtain, prior to the Effective
Time, approval for the listing of such shares of Media Metrix Common Stock,
subject only to official notice of issuance. Jupiter shall as promptly as
practicable furnish Media Metrix with all information concerning Jupiter and its
Subsidiaries as may be required for inclusion in such listing applications.
(f) Media Metrix and Jupiter shall cooperate with one another in obtaining
from Brobeck, Phleger & Harrison LLP, counsel to Jupiter, and Fried, Frank,
Harris, Shriver & Jacobson, counsel to Media Metrix, the requisite opinion
described in Section 6.1(f), and, in connection therewith, each of Jupiter and
Media Metrix shall deliver to Brobeck, Phleger & Harrison LLP and Fried, Frank,
Harris, Shriver & Jacobson certificates of officers of Jupiter, Media Metrix and
Merger Sub in form and substance reasonably satisfactory to such counsel.
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Section 5.4. Additional Reports.
Jupiter and Media Metrix shall each furnish to the other copies of any
Jupiter SEC Reports or Media Metrix SEC Reports, as the case may be, which it
files with the SEC on or after the date hereof, and Jupiter and Media Metrix, as
the case may be, represents and warrants that, as of the respective dates
thereof, such reports will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. Any unaudited consolidated interim
financial statements included in such reports (including any related notes and
schedules) will fairly present, in all material respects, the financial position
of Jupiter and its consolidated Subsidiaries or Media Metrix and its
consolidated Subsidiaries, as the case may be, as of the dates thereof and the
results of operations and cash flows and other information included therein for
the periods set forth therein, in each case in accordance with GAAP consistently
applied during the periods involved (except as otherwise disclosed in the notes
thereto) and subject to normal year-end adjustments that would not, individually
or in the aggregate, be material in amount or effect.
Section 5.5. Consents; Approvals.
Each of the parties shall use its reasonable best efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement, including (A) the obtaining of (and cooperating with the other
parties to obtain) waivers, consents, exemptions, licenses, permits,
authorizations, orders and approvals from, and the making of all other necessary
registrations and filings with, Governmental Entities, (including filings
required to be made pursuant to the HSR Act), (B) the obtaining of (and
cooperating with the other parties to obtain) all waivers, consents, exemptions,
licenses, authorizations and approvals from third parties which may be necessary
or desirable to be obtained by reason of the Merger or in order to consummate
the transactions contemplated by, and to fully carry out the purposes of and
realize the benefits of, this Agreement and (C) the execution and delivery of
any additional instruments necessary to consummate the transaction contemplated
by, and to fully carry out the purposes of and realize the benefits of, this
Agreement.
Section 5.6. Takeover Statutes.
None of the parties shall take any action that would cause the transactions
contemplated by this Agreement to be subject to the requirements of any Takeover
Law. If any Takeover Law shall become applicable to the transactions
contemplated by this Agreement, each of Jupiter and Media Metrix and the members
of their respective Boards of Directors shall grant such approvals and take such
actions as are necessary so that the transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated hereby, and
otherwise act to eliminate or minimize the effects of such Takeover Law on the
transactions contemplated hereby.
Section 5.7. No Solicitation.
(a) During the term of this Agreement, neither Jupiter nor Media Metrix
shall, nor shall either of such companies authorize or permit any of its
Subsidiaries or any of its, or its Subsidiaries', directors, officers,
employees, advisors, agents or representatives, directly or indirectly, to,
solicit, initiate, encourage or facilitate, or furnish or disclose non-public
information in furtherance of, any inquiries or the making of any proposal with
respect to any recapitalization, merger, consolidation or other business
combination involving such company, or the acquisition of 15% or more of the
outstanding capital stock of such company or any of its Subsidiaries or the
acquisition of 15% or more (on a book value or fair market value basis) of the
assets of such company and its Subsidiaries, taken as a whole, in a single
transaction or a series of related transactions, or any combination of the
foregoing (each, a "Competing Transaction"), or negotiate or otherwise engage in
discussions with any person (other than Media Metrix, Merger Sub, Jupiter or
their respective directors, officers, employees, advisors, agents or
representatives) with respect to any Competing Transaction or enter into any
Contract or understanding requiring it to abandon, terminate or fail to
consummate the Merger or any of the other transactions contemplated by this
Agreement, and will immediately cease all existing activities,
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discussions and negotiations with any persons conducted heretofore with respect
to any proposal for a Competing Transaction and request the return or
destruction of all non-public information furnished in connection therewith;
provided that, at any time prior to receipt of the stockholder approval referred
to in Section 3.18 or 4.18, as applicable, Media Metrix or Jupiter (each,
sometimes, a "company"), as the case may be, may, subject to compliance with
Section 5.7(b), furnish information to, and negotiate or otherwise engage in
discussions with, any person (a "Third Party") who (x) delivers a bona fide
written proposal for a Competing Transaction which was not solicited, initiated,
encouraged or facilitated by such company, directly or indirectly, after the
date of this Agreement or otherwise resulted from a breach of this Section 5.7,
and (y) enters into an appropriate confidentiality agreement with such company
(which agreement shall be no less favorable to such company than the applicable
Confidentiality Agreement and a copy of which will be delivered to the other
company promptly after the execution thereof), if, but only if, the Board of
Directors of such company determines in good faith by a majority vote, (i) after
consultation with, and receipt of advice from, its outside legal counsel, that
failing to take such action would constitute a breach of the fiduciary duties of
such Board of Directors under applicable Law, and (ii) after consultation with
such company's independent financial advisors, that such proposal could
reasonably be expected to lead to a Superior Transaction (as hereinafter
defined).
(b) From and after the execution of this Agreement, Media Metrix and
Jupiter shall each promptly advise the other in writing of the receipt, directly
or indirectly, of any inquiries or proposals relating to a Competing Transaction
involving it (including the specific terms thereof and the identity of the Third
Party), and shall keep the other fully informed of the status of any such
inquiries or proposals, of the furnishing of information to the Third Party, and
of any negotiations or discussions relating thereto (including any changes or
adjustments to the terms of such Competing Transaction as a result of
negotiations or otherwise).
(c) If, prior to the adoption of the Merger Agreement by the stockholders
of Jupiter or the approval of the Media Metrix Stockholder Proposals by the
stockholders of Media Metrix, as the case may be, the Board of Directors of such
company determines in good faith by a majority vote, with respect to any written
proposal from a Third Party for a Competing Transaction received after the date
hereof that was not solicited, initiated, encouraged or facilitated by such
company, directly or indirectly, after the date of this Agreement or did not
otherwise result from a breach of this Section 5.7, that, based upon (x) the
written opinion (a copy of which shall have been delivered to the other company)
from such company's independent financial advisors that the Competing
Transaction is a Superior Transaction and (y) the advice of such company's
outside legal counsel, such Competing Transaction is a Superior Transaction and
is in the best interest of such company and its stockholders and failure to
enter into such Competing Transaction would constitute a breach of the fiduciary
duties of the Board of Directors of such company under applicable Law, then such
company may terminate this Agreement and enter into an acquisition agreement for
the Superior Transaction; provided that, prior to any such termination, and in
order for such termination to be effective, (i) such company shall provide the
other company three business days' written notice that it intends to terminate
this Agreement pursuant to this Section 5.7(c), identifying the Superior
Transaction and the parties thereto and delivering an accurate description of
all material terms of the Superior Transaction to be entered into, and (ii) on
the date of termination (provided that the opinion and advice referred to in
clauses (x) and (y) above shall continue in effect without revocation, revision
or modification), such company shall deliver to the other company (A) a written
notice of termination of this Agreement pursuant to this Section 5.7(c), (B) a
wire transfer of immediately available funds in the amount of the Termination
Fee (as defined in Section 7.3), (C) a written acknowledgment from such company
that the termination of this Agreement and the entry into the Superior
Transaction are a Jupiter Triggering Event or a Media Metrix Triggering Event,
as the case may be (each term as defined in Section 7.3), and (D) a written
acknowledgment from each other party to the Superior Transaction that it has
read such company's acknowledgment referred to in clause (C) above and will not
contest the matters thus acknowledged by such company, including the payment of
the Termination Fee.
(d) "Superior Transaction" shall mean a Competing Transaction which the
Board of Directors of Media Metrix or Jupiter, as the case may be, reasonably
determines is more favorable to such company and its stockholders than the
Merger and which is not subject to any financing condition; provided, however,
that, without limiting the foregoing, a Competing Transaction shall not
constitute a Superior Transaction unless, in
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the written opinion (with only customary qualifications) of such company's
independent financial advisors, the value of the consideration to be paid in the
Competing Transaction is more favorable to the stockholders of such company from
a financial point of view than the Merger Consideration. Reference in the
foregoing definition to the "Merger" and "Merger Consideration" shall include,
as applicable, any proposed alteration of the terms of this Agreement submitted
by the other company in writing in response to such Competing Transaction.
(e) Nothing in this Section 5.7 shall prevent the Board of Directors of
Jupiter or the Board of Directors of Media Metrix, as the case may be, from
taking, and disclosing to such company's stockholders, a position contemplated
by Rule 14d-9 and Rule 14e-2(a) promulgated under the Exchange Act or making any
disclosure required under applicable Law (subject, however, to compliance with
the balance of this sentence where applicable), and such Board of Directors may
prior to the date of the Jupiter Meeting or the Media Metrix Meeting (as
applicable), withdraw, modify or change its Recommendation if, but only if and
only to the extent that, such Board of Directors determines in good faith that
such withdrawal, modification or change is required in order to comply with its
fiduciary duties to its stockholders under applicable Law after receiving advice
from its outside legal counsel; provided that in the case of a tender offer, the
Board of Directors of Jupiter or the Board of Directors of Media Metrix, as the
case may be, shall not recommend that stockholders tender their Jupiter Shares
or shares of Media Metrix Common Stock (as applicable) in such tender offer
unless (i) such tender offer is determined to be a Superior Transaction in
accordance with the provisions of Section 5.7(c) and (ii) Jupiter or Media
Metrix, as the case may be, has provided the other with not less than three
business days prior written notice of any such action.
(f) Notwithstanding anything to the contrary contained herein, neither
Media Metrix nor Jupiter shall take any action to make the Takeover Laws
inapplicable to any Competing Transaction in respect of such company (including
any Superior Transaction) prior to the termination of this Agreement in
accordance with its terms.
Section 5.8. Public Announcements.
Each of the parties agrees that it shall not, nor shall any of their
respective affiliates, issue or cause the publication of any press release or
other public announcement with respect to the Merger, this Agreement or the
transactions contemplated hereby, or make any company-wide announcement as to
material changes in the operations of the combined company, without the prior
approval of the other party, except such disclosure as may be required by Law or
by any listing agreement with a national securities exchange or the Nasdaq;
provided that, if such disclosure is required by Law or any such listing
agreement, such disclosure shall not be made without prior consultation of the
other parties.
Section 5.9. Indemnification and Insurance.
(a) Media Metrix and Merger Sub agree that all rights to exculpation and
indemnification for acts or omissions occurring at or prior to the Effective
Time now existing in favor of the current or former directors or officers of
Jupiter or any of its Subsidiaries (the "Indemnified Parties") as provided in
its certificate of incorporation or bylaws or in any Contract disclosed to Media
Metrix in the Jupiter Disclosure Letter shall survive the Merger and shall
continue in full force and effect in accordance with their terms.
(b) For six years from the Effective Time, Media Metrix shall indemnify,
defend and hold harmless each of the Indemnified Parties for acts or omissions
occurring at or prior to the Effective Time to the fullest extent permitted by
applicable Law, including with respect to taking all actions necessary to
advance expenses to the extent permitted by applicable Law.
(c) Media Metrix shall use its reasonable best efforts to obtain and
maintain in effect, or cause the Surviving Corporation to obtain and maintain in
effect, for six years from the Effective Time, Jupiter's current directors' and
officers' liability insurance covering those persons who are currently covered
by Jupiter's directors' and officers' liability insurance policy (a true and
complete copy of which has been heretofore delivered to Media Metrix); provided,
however, that in no event shall Media Metrix or the Surviving Corporation be
required to expend in any year an amount in excess of 150% of the annual
premiums currently paid by Jupiter for such insurance, and, provided, further,
that if the annual premiums of such insurance
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coverage exceed such amount, Media Metrix shall or shall cause the Surviving
Corporation to obtain a policy with the greatest coverage available for a cost
not exceeding such amount.
(d) The provisions of this Section 5.9 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her heirs and
legal representatives.
Section 5.10. Notification of Certain Matters.
Each of Jupiter and Media Metrix shall give prompt notice to the other of
any fact, event or circumstance known to it that is reasonably likely,
individually or taken together with all other existing facts, events and
circumstances known to it, (i) to result in any Material Adverse Effect on it or
(ii) to cause or constitute a breach of any of its representations, warranties,
covenants or agreements contained herein.
Section 5.11. Board of Directors and Officers of Media Metrix.
Media Metrix shall take all action necessary to cause the Board of
Directors of Media Metrix to be comprised, immediately following the Effective
Time, of the following nine persons: (i) one Media Metrix Designee (as defined
below) and two Jupiter Designees (as defined below), who shall be assigned to
the class of directors whose term of office expires at Media Metrix's first
annual meeting of stockholders after the Effective Time, (ii) two Media Metrix
Designees and one Jupiter Designee, who shall be assigned to the class of
directors whose term of office expires at Media Metrix's second annual meeting
of stockholders after the Effective Time and (iii) two Media Metrix Designees
and one Jupiter Designee, who shall be assigned to the class of directors whose
term of office expires at Media Metrix's third annual meeting of stockholders
after the Effective Time. The Board of Directors of Media Metrix also shall
appoint, effective immediately following the Effective Time, (i) Gene DeRose as
Vice Chairman and President of Media Metrix, (ii) Kurt Abrahamson and Mary Ann
Packo as Co-Chief Operating Officers of Media Metrix (and each shall continue
following the Effective Time to serve as President of his or her operating
division), and (iii) Jean Robinson as Executive Vice President, Business
Development of Media Metrix, and Tod Johnson shall continue following the
Effective Time to serve as Chairman and Chief Executive Officer of Media Metrix
and Thomas Lynch shall continue following the Effective Time to serve as Chief
Financial Officer of Media Metrix, all of the foregoing persons to serve in
accordance with the provisions of the certificate of incorporation and bylaws of
Media Metrix and the provisions of the DGCL. "Media Metrix Designees" shall mean
those persons designated by Media Metrix, and "Jupiter Designees" shall mean
those persons designated by Jupiter (any of the foregoing, whether designated by
Media Metrix or Jupiter, a "Designee"), to serve as members of the Board of
Directors of Media Metrix immediately following the Effective Time, which
designation shall specify the class of directors to which such Designee is to be
assigned.
Section 5.12. Employee Plans and Benefit Arrangements.
(a) From and after the Effective Time, subject to applicable Law, Media
Metrix shall cause the Surviving Corporation to honor the obligations of Jupiter
and its Subsidiaries incurred prior to the Effective Time under all existing
Jupiter Compensation and Benefit Plans.
(b) Media Metrix shall cause the Surviving Corporation to grant to all
individuals who are, as of the Effective Time, active employees of Jupiter or
any of its Subsidiaries credit for all service with Jupiter, any of its present
and former Subsidiaries, any other affiliate of Jupiter and their respective
predecessors (collectively, the "Jupiter Affiliated Group") prior to the
Effective Time for purposes of eligibility and vesting (but not benefit accrual)
under the employee benefit plans of Media Metrix and its Subsidiaries in which
such employees commence to participate after the Effective Time, but only to the
extent that (i) such prior service was credited by Jupiter for similar purposes
prior to the Effective Time and (ii) prior service is recognized by Media Metrix
in respect of employees other than the employees of the Jupiter Affiliated
Group. Any employee benefit plan which provides medical, dental or life
insurance benefits after the Effective Time to any individual who is an active
employee of the Jupiter Affiliated Group as of the Effective Time or a dependent
thereof shall, with respect to such individuals, waive any waiting periods and
any pre-existing conditions and actively-at-work exclusions to the extent so
waived under present policy of the Jupiter Affiliated Group and shall provide
that any expenses incurred on or before the Effective Time by such individuals
shall be taken into
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account under such plans for purposes of satisfying applicable deductible or
coinsurance provisions to the extent taken into account under present policy of
the Jupiter Affiliated Group.
Section 5.13. Section 16b Approvals.
The Board of Directors or Compensation Committee of each of Media Metrix
and Jupiter shall grant all approvals and take all other actions required
pursuant to Rules 16b-3(d) and 16b-3(e) under the Exchange Act to cause the
disposition in the Merger of Jupiter Shares and Jupiter Options and the
acquisition in the Merger of shares of Media Metrix Common Stock and Media
Metrix Exchange Options to be exempt from the provisions of Section 16(b) of the
Exchange Act.
Section 5.14. Bylaw Amendment.
Media Metrix shall take all action necessary to cause the bylaws of Media
Metrix to be amended as set forth in Section 6.2(e) effective as of the
Effective Time.
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1. Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Closing Date (or waiver, to the
extent legally permitted, by the party for whose benefit the applicable
condition exists) of the following conditions:
(a) The holders of the issued and outstanding Jupiter Shares shall
have duly adopted this Agreement, and the holders of the issued and
outstanding shares of Media Metrix Common Stock shall have duly approved
the Media Metrix Stockholder Proposals, all in accordance with applicable
Law, the respective certificates of incorporation and bylaws of Jupiter and
Media Metrix, and the rules of the Nasdaq.
(b) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act and no stop order
suspending such effectiveness shall have been issued and remain in effect
and no proceedings for that purpose shall have been initiated or threatened
by the SEC or any other Governmental Entity.
(c) The shares of Media Metrix Common Stock issuable in the Merger
shall have been approved for listing on the Nasdaq, subject only to
official notice of issuance.
(d) All regulatory approvals required to consummate the transactions
contemplated hereby shall have been obtained and shall be in full force and
effect and all statutory waiting periods in respect thereof shall have
expired or been terminated, other than any such regulatory approvals the
failure to obtain which would not reasonably be likely, individually, in
the aggregate or together with all other existing facts, events and
circumstances, to result in any Material Adverse Effect on Jupiter (in the
case of Media Metrix's obligation to close) or on Media Metrix (in the case
of Jupiter's obligation to close).
(e) No Law or Decree shall have been enacted, entered, promulgated, or
enforced by any court or Governmental Entity which prohibits or makes
illegal the consummation of any of the transactions contemplated hereby. In
the event any such Decree shall have been issued, each party shall use its
reasonable efforts to remove such Decree.
(f) Jupiter shall have received from Brobeck, Phleger & Harrison LLP
(in the case of Jupiter's obligation to close) and Media Metrix shall have
received from Fried, Frank, Harris, Shriver & Jacobson (in the case of
Media Metrix's obligation to close), in each case in form and substance
reasonably satisfactory to the receiving company, and dated the Closing
Date, an opinion to the effect that the Merger will qualify for federal
income tax purposes as a reorganization within the meaning of Section
368(a) of the Code. In rendering such opinions, Brobeck, Phleger & Harrison
LLP and Fried, Frank, Harris, Shriver & Jacobson may require and rely upon
representations and covenants, including
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those contained in certificates of officers of Jupiter, Media Metrix and
Merger Sub, which representations and covenants shall be in form and
substance reasonably satisfactory to such counsel.
Section 6.2. Conditions to Obligations of Jupiter to Effect the Merger.
The obligation of Jupiter to effect the Merger is further subject to the
fulfillment at or prior to the Closing Date (or waiver by Jupiter) of the
conditions that (a) the representations and warranties of Media Metrix contained
herein (which for purposes of this clause (a) shall be read as though none of
them contained any Material Adverse Effect or materiality qualifier) shall be
true and correct in all respects as of the Closing Date with the same effect as
though made as of the Closing Date (provided that any representations and
warranties made as of a specified date shall be required only to continue on the
Closing Date to be true and correct as of such specified date) except (i) for
changes specifically permitted by the terms of this Agreement and (ii) where the
failure of the representations and warranties to be true and correct in all
respects would not in the aggregate have a Material Adverse Effect on Media
Metrix; (b) Media Metrix shall have in all material respects performed all
obligations and complied with all covenants required by this Agreement to be
performed or complied with by it at or prior to the Closing Date; (c) each of
the noncompetition agreements set forth in Section 6.2(a) of the Media Metrix
Disclosure Letter between Media Metrix and the persons listed therein shall
continue on the Closing Date to be in full force and effect in accordance with
its terms and shall not have been modified, amended or terminated (other than
with Jupiter's prior written consent), and no person listed in Section 6.2(b) of
the Media Metrix Disclosure Letter shall be in breach thereof; (d) at any time
after the date of this Agreement there shall not have occurred any fact, event
or circumstance which would, individually, in the aggregate, or together with
all other existing facts, events and circumstances, have a Material Adverse
Effect on Media Metrix; (e) the bylaws of Media Metrix shall have been amended
to provide that vacancies on the Board of Directors of Media Metrix created by
the cessation of service of a Jupiter Designee or Media Metrix Designee, as the
case may be, shall be filled by a person selected by a majority of such
company's Designees then serving on such Board of Directors, which bylaw may not
be amended except by vote of a majority of the entire Board of Directors or the
stockholders of Media Metrix, and (f) Media Metrix shall have delivered to
Jupiter a certificate, dated the Closing Date and signed by its Chief Executive
Officer, President or Chief Financial Officer, certifying the satisfaction of
the conditions set forth in the foregoing clauses (a) through (e).
Section 6.3. Conditions to Obligations of Media Metrix to Effect the
Merger.
The obligation of Media Metrix to effect the Merger is further subject to
the fulfillment at or prior to the Closing Date (or waiver by Media Metrix) of
the conditions that (a) the representations and warranties of Jupiter contained
herein (which for purposes of this clause (a) shall be read as though none of
them contained any Material Adverse Effect or materiality qualifier) shall be
true and correct in all respects as of the Closing Date with the same effect as
though made as of the Closing Date (provided that any representations and
warranties made as of a specified date shall be required only to continue on the
Closing Date to be true and correct as of such specified date) except (i) for
changes specifically permitted by the terms of this Agreement and (ii) where the
failure of the representations and warranties to be true and correct in all
respects would not in the aggregate have a Material Adverse Effect on Jupiter;
(b) Jupiter shall have in all material respects performed all obligations and
complied with all covenants required by this Agreement to be performed or
complied with by it at or prior to the Closing Date; (c) each of the
noncompetition agreements set forth in Section 6.3(a) of the Jupiter Disclosure
Letter between Jupiter and the persons listed therein shall continue on the
Closing Date to be in full force and effect in accordance with its terms and
shall not have been modified, amended or terminated (other than with Media
Metrix's prior written consent), and no person listed in Section 6.3(b) of the
Jupiter Disclosure Letter shall be in breach thereof; (d) at any time after the
date of this Agreement there shall not have occurred any fact, event or
circumstance which would, individually, in the aggregate or together with all
other existing facts, events and circumstances, have a Material Adverse Effect
on Jupiter; and (e) Jupiter shall have delivered to Media Metrix a certificate,
dated the Closing Date and signed by its Chief Executive Officer, President or a
Vice President, certifying the satisfaction of the conditions set forth in the
foregoing clauses (a) through (d).
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ARTICLE VII
TERMINATION, WAIVER, AMENDMENT AND CLOSING
Section 7.1. Termination or Abandonment.
This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time (notwithstanding any adoption of this Agreement
by the stockholders of Jupiter or any approval of the Media Metrix Stockholder
Proposals by the stockholders of Media Metrix):
(a) by mutual written consent of Media Metrix and Jupiter;
(b) by either Media Metrix or Jupiter, if the Merger shall not have
been consummated before December 31, 2000; provided, however, that the
right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose breach of any representation or warranty or
whose failure to perform any covenant or agreement under this Agreement has
been the cause of or resulted in the failure of the Merger to occur on or
before such date;
(c) by Media Metrix, if (i) the Board of Directors of Jupiter shall or
shall resolve to (A) either not recommend that Jupiter stockholders vote in
favor of this Agreement and the Merger or withdraw the Jupiter Board
Recommendation, (B) modify the Jupiter Board Recommendation in a manner
adverse to Media Metrix or Merger Sub, or (C) approve, recommend or fail to
take a position that is adverse to any proposed Competing Transaction
involving Jupiter or any of its Subsidiaries, or (ii) the Board of
Directors of Jupiter shall have refused to affirm the Jupiter Board
Recommendation as promptly as practicable (but in any case within five
days) after receipt of any reasonable written request for such affirmation
from Media Metrix or (iii) Jupiter shall have failed as promptly as
practicable after the Registration Statement is declared effective by the
SEC to call the Jupiter Meeting or mail the Joint Proxy Statement to its
stockholders or failed to include the Jupiter Board Recommendation in the
Joint Proxy Statement or failed to hold the Jupiter Meeting when scheduled;
(d) by Jupiter, if (i) the Board of Directors of Media Metrix shall or
shall resolve to (A) either not recommend that Media Metrix's stockholders
vote in favor of the Media Metrix Stockholder Proposals or withdraw the
Media Metrix Board Recommendation, (B) modify the Media Metrix Board
Recommendation in a manner adverse to Jupiter, or (C) approve, recommend or
fail to take a position that is adverse to any proposed Competing
Transaction involving Media Metrix or any of its Subsidiaries, or (ii) the
Board of Directors of Media Metrix shall have refused to affirm the Media
Metrix Board Recommendation as promptly as practicable (but in any case
within five days) after receipt of any reasonable written request for such
affirmation from Jupiter or (iii) Media Metrix shall have failed as
promptly as practicable after the Registration Statement is declared
effective by the SEC to call the Media Metrix Meeting or to mail the Joint
Proxy Statement to its stockholders or failed to include the Media Metrix
Board Recommendation in the Joint Proxy Statement or failed to hold the
Media Metrix Meeting when scheduled;
(e) by either Media Metrix or Jupiter, if at the Jupiter Meeting
(including any adjournment or postponement thereof) the requisite vote of
the stockholders of Jupiter to adopt this Agreement shall not have been
obtained;
(f) by either Media Metrix or Jupiter, if at the Media Metrix Meeting
(including any adjournment or postponement thereof) the requisite vote of
the stockholders of Media Metrix to approve the Media Metrix Stockholder
Proposals shall not have been obtained;
(g) by either Media Metrix or Jupiter, if there shall be any Law or
Decree that prohibits or makes illegal consummation of the Merger, or if
any Decree enjoining Media Metrix or Jupiter from consummating the Merger
shall have been entered and become final and nonappealable;
(h) by either Media Metrix or Jupiter, if there shall have been a
material breach by the other of any of its representations, warranties,
covenants or agreements contained in this Agreement, which breach would
result in the failure to satisfy one or more of the conditions set forth in
Section 6.2 (in the case of a
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breach by Media Metrix) or Section 6.3 (in the case of a breach by
Jupiter), and such breach shall be incapable of being cured or, if capable
of being cured, shall not have been cured within 30 days after written
notice thereof shall have been received by the party alleged to be in
breach;
(i) by Jupiter pursuant to, but only in compliance with, Section 5.7;
or
(j) by Media Metrix pursuant to, but only in compliance with, Section
5.7.
Notwithstanding anything herein to the contrary, no termination by Media
Metrix or Jupiter pursuant to this Section 7.1 under circumstances requiring
payment of a Termination Fee shall be effective unless, concurrently with such
termination, the fee is paid in full by Media Metrix or Jupiter, as applicable,
in accordance with Section 7.3.
Section 7.2. Effect of Termination.
In the event of the termination of this Agreement pursuant to Section 7.1,
this Agreement, except for the provisions of the second sentence of Section 5.2,
this Section 7.2 and Sections 7.3, 8.2 and 8.4, shall become void and have no
effect, without any liability on the part of any party or any of its affiliates.
Notwithstanding the foregoing, nothing in this Section 7.2 shall relieve any
party to this Agreement of liability for any willful breach of any provision of
this Agreement.
Section 7.3. Termination Fee Payments.
(a) Upon the happening of a Jupiter Triggering Event, Jupiter shall pay to
Media Metrix (or to any Subsidiary of Media Metrix designated in writing by
Media Metrix to Jupiter) the amount of $16 million (the "Jupiter Termination
Fee"). "Jupiter Triggering Event" means any one of the following:
(i) a termination of this Agreement by Media Metrix pursuant to
Section 7.1(c);
(ii) a termination of this Agreement by Media Metrix or Jupiter
pursuant to Section 7.1(b) or 7.1(e), if (A) any Competing Transaction is
publicly proposed or announced on or after the date hereof and prior to the
Jupiter Meeting being held and (B) any Jupiter Business Combination (as
hereinafter defined) is entered into, agreed to or consummated by Jupiter
or any of its Subsidiaries within 12 months of such termination of this
Agreement;
(iii) a termination of this Agreement by Jupiter pursuant to Section
7.1(i); or
(iv) a termination of this Agreement by Media Metrix or Jupiter
pursuant to Section 7.1(b), 7.1(e) or by Media Metrix pursuant to Section
7.1(h) (but only if the breach of warranty, representation, covenant or
agreement that gives rise to such termination arises out of bad faith or
willful misconduct of Jupiter), if any Jupiter Business Combination is
entered into, agreed to or consummated by Jupiter within three months of
such termination of this Agreement.
Payment of the Jupiter Termination Fee shall be made by wire transfer of
immediately available funds (1) on the second business day after such
termination in the case of clause (i) of the definition of Jupiter Triggering
Event, (2) on or prior to the date of such termination, in the case of clause
(iii) of the definition of Jupiter Triggering Event, or (3) on the earlier of
the date a Contract is entered into with respect to a Jupiter Business
Combination or a Jupiter Business Combination is consummated, in the case of
clause (ii) or (iv) of the definition of Jupiter Triggering Event. In no event
shall more than one Jupiter Termination Fee be payable under this Agreement.
(b) Upon the happening of a Media Metrix Triggering Event, Media Metrix
shall pay to Jupiter (or to any Subsidiary of Jupiter designated in writing by
Jupiter to Media Metrix) the amount of $16 million (the "Media Metrix
Termination Fee"). "Media Metrix Triggering Event" means any one of the
following:
(i) a termination of this Agreement by Jupiter pursuant to Section
7.1(d);
(ii) a termination of this Agreement by Jupiter or Media Metrix
pursuant to Section 7.1(b) or 7.1(f), if (A) any Competing Transaction is
publicly proposed or announced on or after the date hereof and prior to the
Media Metrix Meeting being held and (B) any Media Metrix Business
Combination (as
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hereinafter defined) is entered into, agreed to or consummated by Media
Metrix or any of its Subsidiaries within 12 months of such termination of
this Agreement;
(iii) a termination of this Agreement by Media Metrix pursuant to
Section 7.1(j); or
(iv) a termination of this Agreement by Jupiter or Media Metrix
pursuant to Section 7.1(b), 7.1(f) or by Jupiter pursuant to Section 7.1(h)
(but only if the breach of warranty, representation, covenant or agreement
that gives rise to such termination arises out of bad faith or willful
misconduct of Media Metrix), if any Media Metrix Business Combination is
entered into, agreed to or consummated by Media Metrix within three months
of such termination of this Agreement.
Payment of the Media Metrix Termination Fee shall be made by wire transfer of
immediately available funds (1) on the second business day after such
termination in the case of clause (i) of the definition of Media Metrix
Triggering Event, (2) on or prior to the date of such termination, in the case
of clause (iii) of the definition of Media Metrix Triggering Event, or (3) on
the earlier of the date a Contract is entered into with respect to a Media
Metrix Business Combination or a Media Metrix Business Combination is
consummated, in the case of clause (ii) or (iv) of the definition of Media
Metrix Triggering Event. In no event shall more than one Media Metrix
Termination Fee be payable under this Agreement.
(c) The parties acknowledge that the agreements contained in paragraphs (a)
and (b) of this Section 7.3 are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, they would
not enter into this Agreement; accordingly, if either of Media Metrix or Jupiter
fails to pay promptly any fee payable by it pursuant to this Section 7.3, then
the party owing such fee shall pay to the party owed such fee its costs and
expenses (including attorneys' fees) in connection with any Litigation brought
by such company to obtain payment of such fee, together with interest on the
amount of the fee at the prime or base rate of The Chase Manhattan Bank from the
date such payment was due under this Agreement until the date of payment.
(d) "Jupiter Business Combination" shall mean:
(i) any merger, consolidation or other business combination as a
result of which the stockholders of Jupiter would hold less than 60% of the
voting securities of Jupiter outstanding following that transaction;
(ii) the acquisition of 40% or more of the outstanding capital stock
of Jupiter; or
(iii) the acquisition of 40% or more (on a book value basis or fair
market value basis) of the assets of Jupiter and its Subsidiaries taken as
a whole (including capital stock of any Subsidiary).
(e) "Media Metrix Business Combination" shall mean:
(i) any merger, consolidation or other business combination as a
result of which the stockholders of Media Metrix would hold less than 60%
of the voting securities of Media Metrix outstanding following that
transaction;
(ii) the acquisition of 40% or more of the outstanding capital stock
of Media Metrix; or
(iii) the acquisition of 40% or more (on a book value basis or) fair
market value basis) of the assets of Media Metrix and its Subsidiaries
taken as a whole (including capital stock of any Subsidiary).
ARTICLE VIII
MISCELLANEOUS
Section 8.1. No Survival of Representations and Warranties.
None of the representations, warranties, covenants or agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Merger, except for the agreements set forth in Article II, the
provisions of Section 5.9 and this Section 8.1.
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Section 8.2. Expenses.
Whether or not the Merger is consummated, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses, except that the expenses incurred
in connection with the filing, printing and mailing of the Registration
Statement and the Joint Proxy Statement (including registration and filing fees
relating thereto) and the fee payable in connection with the filings made
pursuant to the HSR Act shall be shared equally by Jupiter and Media Metrix.
Section 8.3. Counterparts; Effectiveness.
This Agreement may be executed in two or more consecutive counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument, and shall become effective
when one or more counterparts have been signed by each of the parties and
delivered (by telecopy or otherwise) to the other parties.
Section 8.4. Governing Law.
This Agreement and the agreements, instruments and documents contemplated
hereby shall be governed by and construed in accordance with the Laws of the
State of Delaware, without regard to the principles of conflicts of laws
thereof.
Section 8.5. Notices.
All notices and other communications hereunder shall be in writing
(including telecopy or similar writing) and shall be effective (a) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified in
this Section 8.5 and the appropriate telecopy confirmation is received or (b) if
given by any other means, when delivered at the address specified in this
Section 8.5:
To Media Metrix or Merger Sub:
Media Metrix Corporation
250 Park Avenue South, 7th Floor
New York, NY 10003
Attention: Gail Balcerzak, Esq.
Telecopier: (212) 515-8719
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004-1980
Attention: Aviva Diamant, Esq.
Telecopier: (212) 859-4000
To Jupiter:
Jupiter Communications, Inc.
627 Broadway, 2nd Floor
New York, NY 10012
Attention: Alan N. Shapiro, Esq.
Telecopier: (212) 260-6848
copy to:
Brobeck, Phleger & Harrison LLP
1633 Broadway, 47th Floor
New York, New York 10019
Attention: Eric Simonson, Esq.
Telecopier: (212) 586-7878
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Section 8.6. Assignment; Binding Effect.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties;
provided, however, that Merger Sub may assign all of its rights and obligations
under this Agreement and the transactions contemplated hereby to any other
wholly owned Subsidiary of Media Metrix. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
Section 8.7. Severability.
Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, such provision shall be interpreted to be only so broad as is
enforceable.
Section 8.8. Enforcement of Agreement.
The parties hereto agree that money damages or other remedy at law would
not be sufficient or adequate remedy for any breach or violation of, or a
default under, this Agreement by any of them and that in addition to all other
remedies available to any of them, each of them shall be entitled to the fullest
extent permitted by law to an injunction restraining such breach, violation or
default or threatened breach, violation or default and to any other equitable
relief, including specific performance, without bond or other security being
required.
Section 8.9. Miscellaneous.
This Agreement:
(a) along with the Confidentiality Agreements constitutes the entire
agreement, and supersedes all other prior agreements and understandings,
both written and oral, between the parties, or any of them, with respect to
the subject matter hereof and thereof; and
(b) except for the provisions of Section 5.9, is not intended to and
shall not confer upon any person other than the parties hereto any rights
or remedies hereunder.
Section 8.10. Interpretation; Definitions.
When a reference is made in this Agreement to a Section or Subsection, such
reference shall be to a Section or Subsection of this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. The term "including" shall mean including
without limitation, whether or not so stated, and is meant to be by way of
example rather than limitation. The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
References in this Agreement (except as specifically otherwise defined) to
"affiliates" shall mean, as to any person, any other person which, directly or
indirectly, controls, or is controlled by, or is under common control with, such
person. As used in this definition, "control" (including, with its correlative
meanings, "controlled by" and "under common control with") shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of management or policies of a person, whether through the ownership
of securities or other ownership interests, by contract or otherwise. References
in this Agreement to "person" shall mean an individual, a corporation, a
partnership, an association, a trust or any other entity or organization,
including a Governmental Entity. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms. References
in this Agreement to "Subsidiaries" of Jupiter or Media Metrix (as applicable)
shall mean any
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corporation or other form of legal entity of which more than 50% of the
outstanding voting securities are directly or indirectly owned by Jupiter or
Media Metrix, as the case may be.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
MEDIA METRIX, INC
By: /s/ TOD JOHNSON
------------------------------------
Name: Tod Johnson
Title:
MMX ACQUISITION CORP.
By: /s/ TOD JOHNSON
------------------------------------
Name: Tod Johnson
Title:
JUPITER COMMUNICATIONS, INC.
By: /s/ GENE DEROSE
------------------------------------
Name: Gene DeRose
Title:
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ANNEX B
VOTING AGREEMENT
VOTING AGREEMENT (the "Agreement") dated as of June 26, 2000 between each
of the undersigned stockholders (each, a "Stockholder" and collectively, the
"Stockholders") of Media Metrix, Inc., a Delaware corporation ("Media Metrix"),
and Jupiter Communications, Inc., a Delaware corporation ("Jupiter").
WHEREAS, Media Metrix, Jupiter and MMX Acquisition Corp., a Delaware
corporation and wholly-owned subsidiary of Media Metrix ("Merger Sub"), propose
to enter into an Agreement and Plan of Merger dated as of the date hereof (as
the same may be amended or supplemented, the "Merger Agreement") providing for
the merger of Merger Sub with and into Jupiter (the "Merger") upon the terms and
subject to the conditions set forth in the Merger Agreement; and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Jupiter has required that each Stockholder enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:
Section 1. Definitions. Each capitalized term used but not defined herein
shall have the meaning ascribed to it in the Merger Agreement.
Section 2. Representations and Warranties of Each Stockholder. Each
Stockholder hereby, severally and not jointly, represents and warrants to
Jupiter in respect of itself as follows:
(a) The Stockholder is the owner, of record or beneficially (as such
term is defined in the Exchange Act) of that number of shares of Media
Metrix Common Stock ("Media Metrix Shares") set forth opposite its name on
Part 1 of Exhibit A (but not including any Future Media Metrix Shares (as
hereinafter defined)); has the full and exclusive power and authority to
vote (or direct the voting of), and to execute (or direct the execution of)
consents with respect to, such Media Metrix Shares; and owns such Media
Metrix Shares free and clear of any Share Arrangements (including any Share
Arrangements relating to the voting of such Media Metrix Shares) or other
Encumbrances, except for the option set forth in Part 1 of Exhibit A (the
"NPD Option");
(b) Part 2 of Exhibit A sets forth all Media Metrix Shares which the
Stockholder has the right to obtain at any time (disregarding for this
purpose any vesting provisions or other restrictions on exercise) upon the
exercise of stock options outstanding, or under any other Share
Arrangements in effect, on the date hereof ("Future Media Metrix Shares");
(c) The Stockholder does not own, of record or beneficially, or have
the right to acquire any Media Metrix Shares other than as set forth on
Exhibit A; and
(d) The Stockholder has the legal capacity and all other right, power
and authority to enter into this Agreement and the Proxy (as hereinafter
defined) and to carry out its obligations hereunder and thereunder. The
execution and delivery by the Stockholder of this Agreement and the
performance by the Stockholder of its obligations hereunder have been duly
and validly authorized by the trustees of the Stockholder, Board of
Directors of the Stockholder, or general partner[s] of the Stockholder (as
the case may be). This Agreement and the Proxy have been duly and validly
executed and delivered by the Stockholder and constitute the valid and
legally binding agreement of the Stockholder, enforceable against the
Stockholder in accordance with their respective terms; and the execution
and delivery by the Stockholder of this Agreement and the Proxy and the
performance by the Stockholder of its obligations hereunder and thereunder
will not (with or without notice, lapse of time or both) (i) conflict with,
require a consent, waiver or approval under, or result in a breach of or
default under, any of the terms of any Contract to which the Stockholder is
a party or by which the Stockholder is bound, (ii) violate any Decree or
Law applicable to the Stockholder, or (iii) result in the creation of, or
impose any obligation on
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the Stockholder to create, any Encumbrance upon any Media Metrix Shares
other than in favor of Jupiter.
Section 3. Representations and Warranties of Jupiter. Jupiter represents
and warrants to each of the Stockholders as follows: Jupiter has the corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery by Jupiter of this Agreement
and the performance by Jupiter of its obligations hereunder have been duly and
validly authorized by the Board of Directors of Jupiter. This Agreement has been
duly and validly executed and delivered by Jupiter and constitutes the valid and
binding agreement of Jupiter, enforceable against Jupiter in accordance with its
terms (except insofar as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar Laws affecting creditors'
rights generally, or by principles governing the availability of equitable
remedies).
The representations and warranties contained in this Section 3 and in
Section 2 hereof shall be made as of the date hereof and as of each date from
the date hereof through and including the date that the Merger is consummated or
this Agreement is terminated in accordance with its terms.
Section 4. Agreement to Vote Media Metrix Shares. Each Stockholder hereby
agrees to be present (in person or by proxy) and to vote its Media Metrix Shares
and any New Shares (as hereinafter defined), and to cause any holder of record
of its Media Metrix Shares or New Shares to be present (in person or by proxy)
and to vote (including by giving a written consent), (a) in favor of approval of
the Merger and the Merger Agreement and any other matters necessary for the
consummation of the Merger, (b) against any Competing Transaction, and (c)
against any proposed action or transaction that would result in a breach of any
representation, warranty, covenant or agreement of Media Metrix under the Merger
Agreement or result in any of the conditions contained in Section 6.1 or 6.2 of
the Merger Agreement becoming incapable of fulfillment or that would otherwise
prevent, interfere with, frustrate or delay consummation of the Merger (each of
the foregoing actions or transactions, a "Frustrating Transaction"), in each
case, at the Media Metrix Meeting or any other meeting of stockholders of Media
Metrix at which any such matters are considered and at every adjournment thereof
(and, if applicable, in connection with any solicitation of written consents of
stockholders of Media Metrix). Any such vote shall be cast, or consent shall be
given, in accordance with such procedures relating thereto as shall ensure that
it is duly counted for purposes of determining that a quorum is present and for
purposes of recording the results of such vote or consent. Each Stockholder is
delivering to Jupiter, contemporaneously herewith, a proxy in the form attached
hereto as Exhibit B (each, the "Proxy"), with the total number of the
Stockholder's Media Metrix Shares correctly indicated thereon. Each Stockholder
hereby represents and warrants that any proxies heretofore given in respect of
its Media Metrix Shares are not irrevocable and that all such proxies are hereby
revoked. Each Stockholder acknowledges that Jupiter is entering into the Merger
Agreement in reliance upon the Stockholders' execution and delivery of this
Agreement and the Proxies. Each Stockholder hereby affirms that the Proxy is
given in connection with the execution of the Merger Agreement, that the Proxy
is given to secure the performance of the duties of the Stockholder under this
Agreement, that the Proxy is coupled with an interest and may under no
circumstances be revoked, and that the Proxy is executed and intended to be
irrevocable in accordance with Section 212(e) of the Delaware General
Corporation Law. Each Stockholder hereby ratifies and confirms all that the
proxies and attorneys-in-fact appointed under the Proxy may lawfully do or cause
to be done by virtue thereof.
Section 5. Restrictive Covenants. Each of the Stockholders hereby
covenants and agrees with Jupiter as follows:
(a) The Stockholder's Media Metrix Shares and the certificates
representing such Media Metrix Shares will at all times during the term
hereof be held by the Stockholder, or by a nominee or custodian for the
benefit of the Stockholder, free and clear of all Share Arrangements
(including any voting trust or other Share Arrangement relating to the
voting of such Media Metrix Shares) or other Encumbrances, other than this
Agreement and the Proxy and the NPD Option; and
(b) The Stockholder will not transfer, sell, pledge, assign or
otherwise dispose of (including by gift) (collectively, "Transfer"), or
consent to or permit any Transfer of, or enter into any Contract with
respect to any Transfer of, any or all of the Stockholder's Media Metrix
Shares, or any interest therein.
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Notwithstanding the foregoing, the provisions of this Section 5 (i) shall
not apply to Greylock IX Limited Partnership ("Greylock") and nothing herein
shall restrict Greylock's ability to transfer any of its Media Metrix Shares, or
any interest therein, and (ii) shall not restrict the NPD Group, Inc. from
complying with the terms of the NPD Option.
Section 6. Additional Media Metrix Shares. Each Stockholder agrees that,
in the event that, after its execution of this Agreement, there occurs any stock
dividend, stock split, recapitalization, reclassification, combination or share
exchange on, of or affecting the Stockholder's Media Metrix Shares, the number
of Media Metrix Shares set forth opposite the Stockholder's name on Exhibit A
shall, without further action of the parties, be deemed to have been adjusted
appropriately. In addition, each Stockholder agrees that, in the event that,
after its execution of this Agreement, (a) the Stockholder purchases or
otherwise acquires beneficial ownership of any additional Media Metrix Shares
(including through the exercise of any warrants or stock options or any right
under any other Share Arrangements), or (b) the Stockholder acquires the right
to vote or share in the voting of any additional Media Metrix Shares
(collectively, "New Shares"), the New Shares shall, without further action of
the parties, be subject to the terms of this Agreement and the Proxy to the same
extent as if the New Shares had been owned by the Stockholder on the date
hereof. At Jupiter's request, the Stockholder shall deliver promptly to Jupiter
an irrevocable proxy identical in form to the Proxy with respect to such New
Shares. If the Stockholder acquires any New Shares it shall promptly notify
Jupiter of such acquisition.
Section 7. Competing Transaction. Each Stockholder agrees that the
Stockholder will not, nor will the Stockholder authorize or permit any
investment banker, attorney or other advisor, agent or representative of the
Stockholder to, directly or indirectly, solicit, initiate, encourage or
facilitate, or furnish or disclose non-public information in furtherance of, any
Competing Transaction, or negotiate or otherwise engage in discussions with any
person (other than Jupiter, Merger Sub, Media Metrix or their respective
directors, officers, employees, advisors, agents or representatives) with
respect to any Competing Transaction or commit or agree to take any action
inconsistent with the transactions contemplated by the Merger Agreement. Each
Stockholder agrees that it will immediately cease all existing activities,
discussions and negotiations with any persons conducted heretofore with respect
to any proposal for a Competing Transaction. Each Stockholder agrees promptly to
advise Jupiter in writing of the receipt, directly or indirectly, of any
inquiries or proposals relating to a Competing Transaction (including the
specific terms thereof and the identity of the Third Party), and to keep Jupiter
fully informed of the status of any such inquiries or proposals, of the
furnishing of information to the Third Party, and of any negotiations or
discussions relating thereto (including any changes or adjustments to the terms
of such Competing Transaction as a result of negotiations or otherwise).
Section 8. Fiduciary Duty. Nothing herein contained shall restrict, limit
or prohibit any person who is a director, officer or controlling person of any
of the Stockholders and who is also a director or officer of Media Metrix from
exercising, in his capacity as director or officer of Media Metrix, his
fiduciary duties to the stockholders of Media Metrix under applicable Law,
provided that nothing in this Section 8 shall relieve or be deemed to relieve
the Stockholder from its obligations under Sections 4, 5 and 6 hereof.
Section 9. Termination. This Agreement shall terminate upon the earliest
to occur of (A) the Effective Time, (B) the three month anniversary of the date
of termination of the Merger Agreement pursuant to Section 7.1(d), (h) (by
reason of a breach of covenants or agreements by Media Metrix) or (j) thereof,
and (C) the date of termination of the Merger Agreement pursuant to any other
provisions of Section 7.1. Nothing in this Section 9 shall relieve any party of
liability for any breach of any provision of this Agreement occurring prior to
the termination of this Agreement.
Section 10. Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expenses.
Section 11. Counterparts. This Agreement may be executed in two or more
consecutive counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered (by telecopy or otherwise) to the other
parties.
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Section 12. Governing Law. This Agreement and the agreements, instruments
and documents contemplated hereby shall be governed by and construed in
accordance with the Laws of the State of Delaware, without regard to the
principles of conflicts of laws thereof.
Section 13. Notices. All notices and other communications hereunder shall
be in writing (including telecopy or similar writing) and shall be effective (a)
if given by telecopy, when such telecopy is transmitted to the telecopy number
specified in this Section 13 and the appropriate telecopy confirmation is
received or (b) if given by any other means, when delivered at the address
specified in this Section 13.
If to Jupiter:
Jupiter Communications, Inc.
627 Broadway, 2nd Floor
New York, NY 10012
Attention: Alan N. Shapiro, Esq.
Telecopier: (212) 260-6848
if to a Stockholder, to such Stockholder at its address set forth below
its name on the signature page.
Section 14. Successors and Assigns. Neither this Agreement nor any of the
rights, interests or obligations hereunder may be assigned by any of the parties
hereto (except by operation of law) without the prior written consent of the
other parties. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns, including any successor by merger
or otherwise.
Section 15. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, such provision shall be interpreted to be only so
broad as is enforceable.
Section 16. Enforcement of Agreement. Each party hereto agrees that money
damages or other remedy at law would not be sufficient or adequate remedy for
any breach or violation of, or a default under, this Agreement by any of them
and that in addition to all other remedies available to any of them, each of
them shall be entitled to the fullest extent permitted by law to an injunction
restraining such breach, violation or default or threatened breach, violation or
default and to any other equitable relief, including specific performance,
without bond or other security being required.
Section 17. Entire Agreement; Amendments and Waivers. This Agreement
supersedes all prior agreements, written or oral, among the parties hereto with
respect to the subject matter hereof and contains the entire agreement among the
parties with respect to the subject matter hereof. This Agreement may not be
amended, and no provisions hereof may be waived by any party, except by an
instrument in writing signed by all the parties hereto. No waiver of any
provisions hereof by any party shall be deemed a waiver of any other provisions
hereof by any such party, nor shall such waiver be deemed a continuing waiver of
any provision hereof by such party. The failure of any party hereto to exercise
any right, power or remedy provided under this Agreement or otherwise available
in respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of the right to exercise any such or other right, power or remedy or to
demand such compliance.
Section 18. Headings. All Section headings herein are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
Section 19. Further Assurances. Each Stockholder shall, from time to time,
execute and deliver or cause to be executed and delivered, such additional or
further consents, documents and other instruments as Jupiter may request for the
purpose of effectuating the matters covered by this Agreement, including the
granting of additional proxies as set forth in Section 6 hereof. Each
Stockholder shall also use its best efforts to
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take, or cause to be taken, all action, and do, or cause to be done, all things
necessary or advisable in order to consummate and make effective the
transactions contemplated by this Agreement or the Merger Agreement.
Section 20. Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise or beginning of
the exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
IN WITNESS WHEREOF, the parties hereto have executed this Voting Agreement
as of the date first written above.
JUPITER COMMUNICATIONS, INC.
By: /s/ GENE DEROSE
------------------------------------
Name: Gene DeRose
Title:
THE 1995 STACEY JOHNSON TRUST
By: /s/ FRANKLIN L. GREEN
------------------------------------
Trustee: Franklin L. Green
By: /s/ DEBORAH RAIZES
------------------------------------
Trustee: Deborah Raizes
THE 1995 SCOTT JOHNSON TRUST
By: /s/ FRANKLIN L. GREEN
------------------------------------
Trustee: Franklin L. Green
By: /s/ DEBORAH RAIZES
------------------------------------
Trustee: Deborah Raizes
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THE NPD GROUP, INC.
By: /s/ TOD JOHNSON
----------------------------------
Name: Tod Johnson
Title: Chairman and Chief Executive
Officer
Address: 900 West Shore Road
Port Washington, NY 11050
GREYLOCK IX L.P.
By: /s/ HENRY MCCANCE
------------------------------------
Name: Henry McCance
Address:
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ANNEX C
VOTING AGREEMENT
VOTING AGREEMENT (the "Agreement") dated as of June 26, 2000 between each
of the undersigned stockholders (each, a "Stockholder" and collectively, the
"Stockholders") of Jupiter Communications, Inc., a Delaware corporation
("Jupiter"), and Media Metrix, Inc., a Delaware corporation ("Media Metrix").
WHEREAS, Jupiter, Media Metrix and MMX Acquisition Corp., a Delaware
corporation and wholly-owned subsidiary of Media Metrix ("Merger Sub"), propose
to enter into an Agreement and Plan of Merger dated as of the date hereof (as
the same may be amended or supplemented, the "Merger Agreement") providing for
the merger of Merger Sub with and into Jupiter (the "Merger") upon the terms and
subject to the conditions set forth in the Merger Agreement; and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Media Metrix has required that each Stockholder enter into this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:
Section 1. Definitions. Each capitalized term used but not defined herein
shall have the meaning ascribed to it in the Merger Agreement.
Section 2. Representations and Warranties of Each Stockholder. Each
Stockholder hereby, severally and not jointly, represents and warrants to Media
Metrix in respect of himself as follows:
(a) The Stockholder is the owner, of record or beneficially (as such
term is defined in the Exchange Act), of that number of Jupiter Shares set
forth opposite his name on Part 1 of Exhibit A (but not including any
Future Jupiter Shares (as hereinafter defined)); has the full and exclusive
power and authority to vote (or direct the voting of), and to execute (or
direct the execution of) consents with respect to, such Jupiter Shares; and
owns such Jupiter Shares free and clear of any Share Arrangements
(including any Share Arrangements relating to the voting of such Jupiter
Shares) or other Encumbrances;
(b) Part 2 of Exhibit A sets forth all Jupiter Shares which the
Stockholder has the right to obtain at any time (disregarding for this
purpose any vesting provisions or other restrictions on exercise) upon the
exercise of stock options outstanding, or under any other Share
Arrangements in effect, on the date hereof ("Future Jupiter Shares");
(c) The Stockholder does not own, of record or beneficially, or have
the right to acquire any Jupiter Shares other than as set forth on Exhibit
A; and
(d) The Stockholder has the legal capacity and all other right, power
and authority to enter into this Agreement and the Proxy (as hereinafter
defined) and to carry out his obligations hereunder and thereunder. This
Agreement and the Proxy have been duly and validly executed and delivered
by the Stockholder and constitute the valid and legally binding agreement
of the Stockholder, enforceable against the Stockholder in accordance with
their respective terms; and the execution and delivery by the Stockholder
of this Agreement and the Proxy and the performance by the Stockholder of
his obligations hereunder and thereunder will not (with or without notice,
lapse of time or both) (i) conflict with, require a consent, waiver or
approval under, or result in a breach of or default under, any of the terms
of any Contract to which the Stockholder is a party or by which the
Stockholder is bound, (ii) violate any Decree or Law applicable to the
Stockholder, or (iii) result in the creation of, or impose any obligation
on the Stockholder to create, any Encumbrance upon any Jupiter Shares other
than in favor of Media Metrix.
Section 3. Representations and Warranties of Media Metrix. Media Metrix
represents and warrants to each of the Stockholders as follows: Media Metrix has
the corporate power and authority to enter into this
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Agreement and to carry out its obligations hereunder. The execution and delivery
by Media Metrix of this Agreement and the performance by Media Metrix of its
obligations hereunder have been duly and validly authorized by the Board of
Directors of Media Metrix. This Agreement has been duly and validly executed and
delivered by Media Metrix and constitutes the valid and binding agreement of
Media Metrix, enforceable against Media Metrix in accordance with its terms
(except insofar as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar Laws affecting creditors'
rights generally, or by principles governing the availability of equitable
remedies).
The representations and warranties contained in this Section 3 and in
Section 2 hereof shall be made as of the date hereof and as of each date from
the date hereof through and including the date that the Merger is consummated or
this Agreement is terminated in accordance with its terms.
Section 4. Agreement to Vote Jupiter Shares. Each Stockholder hereby
agrees to be present (in person or by proxy) and to vote his Jupiter Shares and
any New Shares (as hereinafter defined), and to cause any holder of record of
his Jupiter Shares or New Shares to be present (in person or by proxy) and to
vote (including by giving a written consent), (a) in favor of approval of the
Merger and the Merger Agreement and any other matters necessary for the
consummation of the Merger, (b) against any Competing Transaction, and (c)
against any proposed action or transaction that would result in a breach of any
representation, warranty, covenant or agreement of Jupiter under the Merger
Agreement or result in any of the conditions contained in Section 6.1 or 6.3 of
the Merger Agreement becoming incapable of fulfillment or that would otherwise
prevent, interfere with, frustrate or delay consummation of the Merger (each of
the foregoing actions or transactions, a "Frustrating Transaction"), in each
case, at the Jupiter Meeting or any other meeting of stockholders of Jupiter at
which any such matters are considered and at every adjournment thereof (and, if
applicable, in connection with any solicitation of written consents of
stockholders of Jupiter). Any such vote shall be cast, or consent shall be
given, in accordance with such procedures relating thereto as shall ensure that
it is duly counted for purposes of determining that a quorum is present and for
purposes of recording the results of such vote or consent. Each Stockholder is
delivering to Media Metrix, contemporaneously herewith, a proxy in the form
attached hereto as Exhibit B (each, the "Proxy"), with the total number of the
Stockholder's Jupiter Shares correctly indicated thereon. Each Stockholder
hereby represents and warrants that any proxies heretofore given in respect of
his Jupiter Shares are not irrevocable and that all such proxies are hereby
revoked. Each Stockholder acknowledges that Media Metrix is entering into the
Merger Agreement in reliance upon the Stockholders' execution and delivery of
this Agreement and the Proxies. Each Stockholder hereby affirms that the Proxy
is given in connection with the execution of the Merger Agreement, that the
Proxy is given to secure the performance of the duties of the Stockholder under
this Agreement, that the Proxy is coupled with an interest and may under no
circumstances be revoked, and that the Proxy is executed and intended to be
irrevocable in accordance with Section 212(e) of the Delaware General
Corporation Law. Each Stockholder hereby ratifies and confirms all that the
proxies and attorneys-in-fact appointed under the Proxy may lawfully do or cause
to be done by virtue thereof.
Section 5. Restrictive Covenants. Each of the Stockholders hereby
covenants and agrees with Media Metrix as follows:
(a) The Stockholder's Jupiter Shares and the certificates representing
such Jupiter Shares will at all times during the term hereof be held by the
Stockholder, or by a nominee or custodian for the benefit of the
Stockholder, free and clear of all Share Arrangements (including any voting
trust or other Share Arrangement relating to the voting of such Jupiter
Shares) or other Encumbrances, other than this Agreement and the Proxy; and
(b) The Stockholder will not transfer, sell, pledge, assign or
otherwise dispose of (including by gift) (collectively, "Transfer"), or
consent to or permit any Transfer of, or enter into any Contract with
respect to any Transfer of, any or all of the Stockholder's Jupiter Shares,
or any interest therein.
Section 6. Additional Jupiter Shares. Each Stockholder agrees that, in the
event that, after his execution of this Agreement, there occurs any stock
dividend, stock split, recapitalization, reclassification, combination or share
exchange on, of or affecting the Stockholder's Jupiter Shares, the number of
Jupiter Shares set forth opposite the Stockholder's name on Exhibit A shall,
without further action of the parties, be
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deemed to have been adjusted appropriately. In addition, each Stockholder agrees
that, in the event that, after his execution of this Agreement, (a) the
Stockholder purchases or otherwise acquires beneficial ownership of any
additional Jupiter Shares (including through the exercise of any warrants or
stock options or any right under any other Share Arrangements), or (b) the
Stockholder acquires the right to vote or share in the voting of any additional
Jupiter Shares (collectively, "New Shares"), the New Shares shall, without
further action of the parties, be subject to the terms of this Agreement and the
Proxy to the same extent as if the New Shares had been owned by the Stockholder
on the date hereof. At Media Metrix's request, the Stockholder shall deliver
promptly to Media Metrix an irrevocable proxy identical in form to the Proxy
with respect to such New Shares. If the Stockholder acquires any New Shares, he
shall promptly notify Media Metrix of such acquisition.
Section 7. Competing Transaction. Each Stockholder agrees that the
Stockholder will not, nor will the Stockholder authorize or permit any
investment banker, attorney or other advisor, agent or representative of the
Stockholder to, directly or indirectly, solicit, initiate, encourage or
facilitate, or furnish or disclose non-public information in furtherance of, any
Competing Transaction, or negotiate or otherwise engage in discussions with any
person (other than Media Metrix, Merger Sub, Jupiter or their respective
directors, officers, employees, advisors, agents or representatives) with
respect to any Competing Transaction or commit or agree to take any action
inconsistent with the transactions contemplated by the Merger Agreement. Each
Stockholder agrees that he will immediately cease all existing activities,
discussions and negotiations with any persons conducted heretofore with respect
to any proposal for a Competing Transaction. Each Stockholder agrees promptly to
advise Media Metrix in writing of the receipt, directly or indirectly, of any
inquiries or proposals relating to a Competing Transaction (including the
specific terms thereof and the identity of the Third Party), and to keep Media
Metrix fully informed of the status of any such inquiries or proposals, of the
furnishing of information to the Third Party, and of any negotiations or
discussions relating thereto (including any changes or adjustments to the terms
of such Competing Transaction as a result of negotiations or otherwise).
Section 8. Fiduciary Duty. Nothing herein contained shall restrict, limit
or prohibit any of the Stockholders who is a director or officer of Jupiter from
exercising, in his capacity as director or officer, his fiduciary duties to the
stockholders of Jupiter under applicable Law, provided that nothing in this
Section 8 shall relieve or be deemed to relieve such Stockholder from his
obligations under Sections 4, 5 and 6 hereof.
Section 9. Termination. This Agreement shall terminate upon the earliest
to occur of (A) the Effective Time, (B) the three month anniversary of the date
of termination of the Merger Agreement pursuant to Section 7.1(c), (h) (by
reason of a breach of covenants or agreements by Jupiter) or (i) thereof, and
(C) the date of termination of the Merger Agreement pursuant to any other
provisions of Section 7.1. Nothing in this Section 9 shall relieve any party of
liability for any breach of any provision of this Agreement occurring prior to
the termination of this Agreement.
Section 10. Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expenses.
Section 11. Counterparts. This Agreement may be executed in two or more
consecutive counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered (by telecopy or otherwise) to the other
parties.
Section 12. Governing Law. This Agreement and the agreements, instruments
and documents contemplated hereby shall be governed by and construed in
accordance with the Laws of the State of Delaware, without regard to the
principles of conflicts of laws thereof.
Section 13. Notices. All notices and other communications hereunder shall
be in writing (including telecopy or similar writing) and shall be effective (a)
if given by telecopy, when such telecopy is transmitted to the telecopy number
specified in this Section 13 and the appropriate telecopy confirmation is
received or (b) if given by any other means, when delivered at the address
specified in this Section 13.
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If to Media Metrix:
Media Metrix Corporation
250 Park Avenue South, 7th Floor
New York, NY 10003
Attention: Gail Balcerzak, Esq.
Telecopier: (212) 515-8719
if to a Stockholder, to him at his address set forth below his name on
the signature page.
Section 14. Successors and Assigns. Neither this Agreement nor any of the
rights, interests or obligations hereunder may be assigned by any of the parties
hereto (except by operation of law) without the prior written consent of the
other parties; provided, however, that Media Metrix may assign all of its rights
and obligations under this Agreement to any person to whom Media Metrix may
assign its rights under the Merger Agreement. Subject to the preceding sentence,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns, including,
in the case of Media Metrix, any successor by merger or otherwise, and, in the
case of the Stockholder, any trustee, executor, heir, legatee or personal
representative succeeding to the ownership of (or power to vote) such
Stockholder's Jupiter Shares or New Shares (including as a result of the death,
disability or incapacity of a Stockholder).
Section 15. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, such provision shall be interpreted to be only so
broad as is enforceable.
Section 16. Enforcement of Agreement. Each party hereto agrees that money
damages or other remedy at law would not be sufficient or adequate remedy for
any breach or violation of, or a default under, this Agreement by any of them
and that in addition to all other remedies available to any of them, each of
them shall be entitled to the fullest extent permitted by law to an injunction
restraining such breach, violation or default or threatened breach, violation or
default and to any other equitable relief, including specific performance,
without bond or other security being required.
Section 17. Entire Agreement; Amendments and Waivers. This Agreement
supersedes all prior agreements, written or oral, among the parties hereto with
respect to the subject matter hereof and contains the entire agreement among the
parties with respect to the subject matter hereof. This Agreement may not be
amended, and no provisions hereof may be waived by any party, except by an
instrument in writing signed by all the parties hereto. No waiver of any
provisions hereof by any party shall be deemed a waiver of any other provisions
hereof by any such party, nor shall such waiver be deemed a continuing waiver of
any provision hereof by such party. The failure of any party hereto to exercise
any right, power or remedy provided under this Agreement or otherwise available
in respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its or his obligations hereunder, and any custom or practice
of the parties at variance with the terms hereof, shall not constitute a waiver
by such party of the right to exercise any such or other right, power or remedy
or to demand such compliance.
Section 18. Headings. All Section headings herein are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
Section 19. Further Assurances. Each Stockholder shall, from time to time,
execute and deliver or cause to be executed and delivered, such additional or
further consents, documents and other instruments as Media Metrix may request
for the purpose of effectuating the matters covered by this Agreement, including
the granting of additional proxies as set forth in Section 6 hereof. Each
Stockholder shall also use his best efforts to take, or cause to be taken, all
action, and do, or cause to be done, all things necessary or advisable in order
to consummate and make effective the transactions contemplated by this Agreement
or the Merger Agreement.
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Section 20. Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise or beginning of
the exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
IN WITNESS WHEREOF, the parties hereto have executed this Voting Agreement
as of the date first written above.
MEDIA METRIX, INC.
By: /s/ TOD JOHNSON
------------------------------------
Name: Tod Johnson
Title: Chairman and Chief Executive
Officer
STOCKHOLDER
/s/ ERNEST ABRAHAMSON
--------------------------------------
Name: Ernest Abrahamson
Address:
STOCKHOLDER
/s/ KURT ABRAHAMSON
--------------------------------------
Name: Kurt Abrahamson
Address:
STOCKHOLDER
/s/ GENE DEROSE
--------------------------------------
Name: Gene DeRose
Address:
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<PAGE> 253
ANNEX D
June 26, 2000
Board of Directors
Media Metrix Inc.
250 Park Avenue South, 7th Floor
New York, NY 10003
Members of the Board:
We understand that Media Metrix, Inc. a Delaware corporation ("Media
Metrix"), Merger Sub Corp., a Delaware corporation and a subsidiary of Media
Metrix ("Merger Sub"), and Jupiter Communications, Inc. a Delaware corporation
("Jupiter"), propose to enter into an Agreement and Plan of Merger (the "Merger
Agreement") pursuant to which Merger Sub will be merged with and into Jupiter,
which will be the surviving entity (the "Merger"). Pursuant to the Merger, as
more fully described in the draft dated June 25, 2000 of the Merger Agreement,
each issued and outstanding share of common stock, $0.001 par value per share,
of Jupiter ("Jupiter Common Stock") will be converted into the right to receive
that number of shares of common stock, $0.01 par value per share, of Media
Metrix ("Media Metrix Common Stock") equal to the Exchange Ratio (as defined in
the Merger Agreement), subject to certain adjustments. The terms and conditions
of the Merger are set forth in more detail in the Merger Agreement.
You have asked for our opinion as investment bankers as to whether the
Exchange Ratio is fair to Media Metrix from a financial point of view, as of the
date hereof.
In connection with our opinion, we have, among other things, (i) reviewed
certain publicly available financial and other data with respect to Jupiter and
Media Metrix, including the consolidated financial statements for the most
recent year ending December 31, 1999 and the interim period ending March 31,
2000 and certain other relevant financial and operating data relating to Jupiter
and Media Mertix made available to us from published sources and from the
internal records of Jupiter and Media Metrix, (ii) reviewed the financial terms
and conditions of the draft dated June 25, 2000 of the Merger Agreement; (iii)
reviewed certain publicly available information concerning the stock market
trading history for Media Metrix Common Stock and Jupiter Common Stock; (iv)
compared Jupiter and Media Metrix from a financial point of view with certain
other Internet-related service companies which we deem to be relevant; (v)
considered the financial terms, to the extent publicly available, of selected
recent business combinations of Internet-related service companies which we
deemed to be comparable, in whole or in part, to the Merger; (vi) reviewed and
discussed with representatives of the management of Jupiter and Media Metrix
certain information of a business and financial nature regarding Jupiter and
Media Metrix, furnished to us by them, including financial forecasts and related
assumptions of Jupiter and Media Metrix; (vii) made inquiries regarding and
discussed the Merger and the Merger Agreement and other matters related thereto
with Media Metrix's counsel; and (viii) performed such other analyses and
examinations as we have deemed appropriate.
In connection with our review, we have not assumed any obligation
independently to verify the foregoing information and have relied on its being
accurate and complete in all material respects. With respect to the financial
forecasts for Jupiter and Media Metrix provided to us by their respective
managements, upon their advice and with your consent we have assumed for
purposes of our opinion that the forecasts have been reasonably prepared on
bases reflecting the best available estimates and judgments of their respective
managements at the time of preparation as to the future financial performance of
Jupiter and Media Metrix and that they provide a reasonable basis upon which we
can form our opinion. We have also assumed that there have been no material
changes in Jupiter or Media Metrix's assets, financial condition, results of
operations, business or prospects since the respective dates of their last
financial statements made available to us. We have relied on advice of counsel
and independent accountants to Media Metrix as to all legal and financial
reporting matters with respect to Media Metrix, the Merger and the Merger
Agreement. We have assumed that the Merger will be consummated in a manner that
complies in all respects with the applicable provisions of the Securities Act of
1933, as amended (the "Securities Act"), the Securities Exchange Act of 1934 and
all other applicable federal and state statutes, rules and regulations. In
addition, we have not
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assumed responsibility for making an independent evaluation, appraisal or
physical inspection of any of the assets or liabilities (contingent or
otherwise) of Jupiter or Media Metrix, nor have we been furnished with any such
appraisals. The Media Metrix management team has informed us, and we have
assumed, that the Merger will be recorded as a purchase under generally accepted
accounting principles. Finally, our opinion is based on economic, monetary and
market and other conditions as in effect on, and the information made available
to us as of, the date hereof. Accordingly, although subsequent developments may
affect this opinion, we have not assumed any obligation to update, revise or
reaffirm this opinion.
We have further assumed with your consent that the Merger will be
consummated in accordance with the terms described in the draft dated June 25,
2000 of the Merger Agreement, without any further amendments thereto, and
without waiver by Media Metrix of any of the conditions to its obligations
thereunder.
We have acted as financial advisor to Media Metrix in connection with the
Merger and will receive a fee for our services including rendering this opinion,
a significant portion of which is contingent upon the consummation of the
Merger. In the ordinary course of our business, we actively trade the equity
securities of both Media Metrix and Jupiter for our own account and for the
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities. We have also acted as an underwriter in connection
with offerings of securities of both Media Metrix and Jupiter and performed
various investment banking services for both Media Metrix and Jupiter.
Based upon the foregoing and in reliance thereon, it is our opinion as
investment bankers that the Exchange Ratio is fair to Media Metrix from a
financial point of view, as of the date hereof.
This opinion is directed to the Board of Directors of Media Metrix in its
consideration of the Merger and is not a recommendation to any shareholder as to
how such shareholder should vote with respect to the Merger. Further, this
opinion addresses only the financial fairness of the Exchange Ratio to Media
Metrix and does not address the relative merits of the Merger and any
alternatives to the Merger, Media Metrix's underlying decision to proceed with
or effect the Merger, or any other aspect of the Merger. This opinion may not be
used or referred to by Media Metrix, or quoted or disclosed to any person in any
manner, without our prior written consent, which consent is hereby given to the
inclusion of this opinion in any registration statement or proxy statement. In
furnishing this opinion, we do not admit that we are experts within the meaning
of the term "experts" as used in the Securities Act and the rules and
regulations promulgated thereunder, nor do we admit that this opinion
constitutes a report or valuation within the meaning of the Section 11 of the
Securities Act.
Very truly yours,
/s/ THOMAS WEISEL PARTNERS LLC
THOMAS WEISEL PARTNERS LLC
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<PAGE> 255
ANNEX E
June 26, 2000
Board of Directors
Jupiter Communications, Inc.
627 Broadway
New York, NY 10012
Members of the Board:
We understand that Jupiter Communications, Inc. ("Jupiter" or the
"Company"), Media Metrix, Inc. ("Media Metrix") and Merger Sub Corp., a
wholly-owned subsidiary of Media Metrix ("Merger Sub"), propose to enter into an
Agreement and Plan of Merger, substantially in the form of the draft dated June
26, 2000 (the "Merger Agreement"), which provides, among other things, for the
merger (the "Merger") of Merger Sub with and into Jupiter. Pursuant to the
Merger, Jupiter will become a wholly-owned subsidiary of Media Metrix, and each
outstanding share of common stock, par value $0.001 per share, of Jupiter (the
"Jupiter Common Stock"), other than shares held in treasury or held by Media
Metrix or Jupiter or either of their affiliates, shall be converted into the
right to receive .946 shares (the "Exchange Ratio") of common stock, par value
$0.01 per share, of Media Metrix (the "Media Metrix Common Stock"). The terms
and conditions of the Merger are more fully set forth in the Merger Agreement
and certain related documents.
You have asked for our opinion as to whether the Exchange Ratio pursuant to
the Merger Agreement is fair from a financial point of view to holders of shares
of Jupiter Common Stock.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly-available financial statements and other
information of the Company and Media Metrix;
(ii) reviewed certain internal financial statements and other
financial and operating data concerning the Company and Media Metrix,
prepared by the managements of the Company and Media Metrix, respectively;
(iii) reviewed certain financial projections of the Company and Media
Metrix prepared by the managements of the Company and Media Metrix,
respectively;
(iv) discussed the past and current operations and financial condition
and the prospects of the Company and Media Metrix with senior executives of
the Company and Media Metrix, respectively;
(v) reviewed the pro forma impact of the Merger on Media Metrix's
financial statements;
(vi) reviewed information relating to certain strategic, financial and
operational benefits anticipated from the Merger prepared by the
managements of the Company and Media Metrix with senior executives of the
Company and Media Metrix, respectively;
(vii) reviewed the reported prices and trading activity for the
Jupiter Common Stock and the Media Metrix Common Stock;
(viii) compared the financial performance of the Company and Jupiter
and the prices and trading activity of the Jupiter Common Stock and the
Media Metrix Common Stock with that of certain other comparable
publicly-traded companies and their securities;
(ix) reviewed the financial terms, to the extent publicly available,
of certain comparable acquisition transactions;
(x) participated in discussions and negotiations among representatives
of the Company and Media Metrix and their legal and financial advisors;
(xi) reviewed the Merger Agreement and certain related documents;
(xii) considered such other factors and performed such other analysis as we
have deemed appropriate.
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Jupiter Communications, Inc.
June 26, 2000
Page 2
We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for the purposes of
this opinion. With respect to the financial projections, including information
relating to certain strategic, financial and operational benefits anticipated
from the Merger, we have assumed that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
future financial performance and prospects of the Company and Media Metrix. We
have relied upon the assessment by the managements of Jupiter and Media Metrix
of their ability to retain key employees of Jupiter. We have also relied upon,
without independent verification, the assessment by the management of Jupiter of
the Company's services and products, the timing and risks associated with the
integration of Jupiter with Media Metrix and the validity of, and risks
associated with, the Company's existing and future services and products.
In addition, we have assumed that the Merger will be consummated in
accordance with the terms set forth in the Merger Agreement, including, among
other things, that the Merger will be treated as a tax-free reorganization
and/or exchange, pursuant to the Internal Revenue Code of 1986. We have not made
any independent valuation or appraisal of the assets or liabilities of the
Company or Media Metrix, nor have we been furnished with any such appraisals.
Our opinion is necessarily based on financial, economic, market and other
conditions as in effect on, and the information made available to us as of, the
date hereof.
In arriving at our opinion, we were not authorized to solicit, and did not
solicit, interest from any party with respect to the Merger; nor did we
negotiate with any party other than Media Metrix in connection with this
transaction.
We have acted as financial advisor to the Board of Directors of the Company
in connection with this transaction and will receive a fee for our services.
It is understood that this letter is for the information of the Board of
Directors of the Company and may not be used for any other purpose without our
prior written consent, except that this opinion may be included in its entirety,
if required, in any filing made by the Company in respect of the transaction
with the Securities and Exchange Commission. In addition, this opinion does not
in any manner address the prices at which the Media Metrix Common Stock will
trade following consummation of the Merger, and Morgan Stanley expresses no
opinion or recommendation as to how the shareholders of the Company should vote
at the shareholders' meeting held in connection with the Merger.
Based on and subject to the foregoing, we are of the opinion on the date
hereof that the Exchange Ratio pursuant to the Merger Agreement is fair from a
financial point of view to holders of shares of Jupiter Common Stock.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ MICHAEL J. BOUBLIK
------------------------------------
Michael J. Boublik
Managing Director
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PART II
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145(a) of the General Corporation Law of the State of Delaware
("DGCL") provides that a Delaware corporation may indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, other than an action by or in the right of the corporation, by
reason of the fact that he or she is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him or her in connection with
such action, suit or proceeding if he or she acted in good faith and in a manner
he or she reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful.
Section 145(b) of the DGCL provides that a Delaware corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he or
she acted in any of the capacities set forth above, against expenses (including
attorneys' fees) actually and reasonably incurred by him or her in connection
with the defense or settlement of such action or suit if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the corporation and except that no indemnification may be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the court in which such action or suit was brought shall determine that despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to be indemnified for such
expenses which the court shall deem proper.
Section 145 of the DGCL further provides that to the extent a director or
officer of a corporation has been successful in the defense of any action, suit
or proceeding referred to in subsections (a) and (b) or in the defense of any
claim, issue or matter therein, he or she shall be indemnified against expenses
(including attorney's fees) actually and reasonably incurred by him or her in
connection therewith; that indemnification provided for by Section 145 shall not
be deemed exclusive of any other rights to which the indemnified party may be
entitled; and that the corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise
against any liability asserted against him or her or incurred by him or her in
any such capacity or arising out of his or her status as such, whether or not
the corporation would have the power to indemnify him or her against such
liabilities under Section 145.
Section 102(b)(7) of the DGCL provides that a certificate of incorporation
may contain a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that such provision shall not
eliminate or limit the liability of a director: (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders; (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) under Section 174 of the DGCL; or (iv) for any
transaction from which the director derived an improper personal benefit.
Article Tenth of Media Metrix' Amended Certificate of Incorporation states
that to the fullest extent permitted by the DGCL, no director of Media Metrix
shall be personally liable to Media Metrix, any of its stockholders or any other
person or entity for monetary damages for breach of fiduciary duty owed to
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Media Metrix, its stockholders or such other person or entity owing to such
director's position as a director of Media Metrix.
Article Ninth of Media Metrix' Amended Certificate of Incorporation contains
substantially the same provisions for indemnification as those contained in
Section 145 of the DGCL. Additionally, Article Ninth provides that in any
judicial proceeding in which a person seeks indemnification pursuant to Article
Ninth, the burden of proving that such person is not entitled to indemnification
shall be on Media Metrix. Article Ninth further provides that any person who
successfully establishes a right to indemnification, in whole or in part, under
Article Ninth in any such proceeding shall be indemnified by Media Metrix
against expenses incurred (including attorneys' fees) in establishing such right
to indemnification. Finally, Article Ninth provides that in the event the DGCL
is amended to expand further the indemnification permitted to the persons
covered by Article Ninth, Media Metrix shall indemnify such persons to the
fullest extent permitted by the DGCL, as so amended. Reference is made to the
Amended Certificate of Incorporation and Bylaws incorporated by reference into
this joint proxy statement/prospectus as Exhibits 3.1 and 3.2.
Media Metrix has entered into indemnification agreements with its current
directors and executive officers. Media Metrix has insured its directors and
officers against losses arising from any claim against them as such for wrongful
acts or omission, subject to certain limitations.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
2.1 Plan of Merger between Media Metrix and PC Meter L.P. dated as of March 31, 1996*
2.2 Plan of Merger and Reorganization between Media Metrix, Inc. and RelevantKnowledge dated as of
September 30, 1998*
2.3 Agreement and Plan of Merger dated as of October 6, 1999, by and among Media Metrix, AdRelevance,
Merger Sub and the stockholders of AdRelevance named therein***
2.4 Share Purchase Agreement dated February 8, 2000 among SIFO Group AB, Osprey Research BV and Media
Metrix, Inc.****
2.5 Agreement and Plan of Merger, dated as of June 26, 2000, among Media Metrix, Inc., MMX Acquisition
Corp. and Jupiter Communications, Inc. (included in this joint proxy statement/prospectus as Annex
A)
3.1 Amended and Restated Certificate of Incorporation of Media Metrix, Inc.*
3.2+ Form of Amended and Restated Certificate of Incorporation of Media Metrix, Inc.
3.3 Certificate of Amendment to Amended and Restated Certificate of Incorporation*
3.4 Amended and Restated Bylaws of Media Metrix, Inc.*
3.5+ Amendment to Amended and Restated Bylaws of Media Metrix, Inc.
4.1 Registration Rights Agreement dated as of November 5, 1998, by and among Media Metrix and the
Stockholders listed on Schedule I thereto*
4.2 Specimen Stock Certificate*
</TABLE>
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<TABLE>
<S> <C>
4.3 Registration Rights Agreement by and among Media Metrix, GfK AG and Ipsos S.A. made as of September
1, 1999**
4.4 Stock Option Agreement by and between Media Metrix and GfK made as of September 1, 1999**
4.5 Stock Option Agreement by and between Media Metrix and Ipsos made as of September 1, 1999**
4.6 Registration Rights Agreement dated October 8, 1999 by and among Media Metrix and the security
holders of Media Metrix set forth on Schedule I thereto***
4.7 Warrant to purchase common stock held by Silicon Valley Bank**
4.8 Registration Rights Agreement dated March 6, 2000 between Osprey Research BV and Media Metrix,
Inc.****
4.9 Media Metrix, Inc. Stock Option Agreement dated March 6, 2000 between Osprey Research BV and Media
Metrix, Inc.****
4.10 Amendment to Registration Rights Agreement dated March 6, 2000 among GfK AG, Ipsos SA, Osprey
Research BV and Media Metrix, Inc.****
5.1+ Opinion of Fried, Frank, Harris, Shriver & Jacobson
8.1+ Opinion of Fried, Frank, Harris, Shriver & Jacobson (tax counsel to Media Metrix, Inc.)
8.2+ Opinion of Brobeck, Phleger & Harrison, LLP (tax counsel to Jupiter Communications, Inc.)
9.1 Voting Agreement among Jupiter Communications, Inc., The 1995 Stacey Johnson Trust, The 1995 Scott
Johnson Trust and The NPD Group, Inc., dated June 26, 2000 (included in this joint proxy
statement/prospectus as Annex B)
9.2 Voting Agreement among Media Metrix, Inc., Ernest Abrahamson, Kurt
Abrahamson and Gene DeRose, dated June 26, 2000 (included in this
joint proxy statement/prospectus as Annex C)
10.1 Building Lease between Eagle Insurance Company and The NPD Group, Inc. dated as of August 18, 1997*
10.2 Lease Agreement between Carriage House Associates Limited Partnership and RelevantKnowledge, Inc.
dated as of May 16, 1997*
10.3+ Lease Agreement between 352 P.A.S. Associates and Media Metrix, Inc. dated as of March 1, 2000
10.4+ Sublease between The NPD Group, Inc. and Media Metrix, Inc. dated as of April 2000
10.5+ Sublease between TMP Worldwide, Inc. and Media Metrix, Inc. dated as of April 2000
10.6+ Lease Agreement between Grace Brusseau, individually, and Grace Brusseau and Stephen Kay,
co-trustees of Testamentary Trust of Michael J. Borelli, dba Grazia Investment Company and Media
Metrix, Inc. dated December 17, 1999
10.7 Services Agreement dated as of September 30, 1998 by and between Media Metrix and The NPD Group,
Inc.*
10.8 License Agreement dated as of November 5, 1998 by and between Media Metrix and The NPD Group, Inc.*
</TABLE>
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<TABLE>
<S> <C>
10.9 Form of Indemnification Agreement*
10.10 Form of Non-Disclosure Agreement and Confidential Information and Invention Assignment Agreement*
10.11 Form of Non-Disclosure Agreement and Confidential Information and Invention Assignment Agreement*
10.12 Amended and Restated Management Services Agreement by and between Media Metrix, The NPD Group, Inc.
and Tod Johnson*
10.13 Media Metrix Stock Option Plan*
10.14 1998 Equity Incentive Plan*
10.15 1998 AdRelevance Stock Option Plan**
10.16 1999 AdRelevance Stock Option Plan**
10.17 Media Metrix, Inc. 2000 Equity Incentive Plan*****
10.18 Media Metrix, Inc. 2000 Employee Stock Purchase Plan*****
10.19 Media Metrix, Inc. Amended and Restated 2000 Equity Incentive Plan
10.20 Media Metrix, Inc. Amended and Restated 2000 Employee Stock Purchase Plan
21 Subsidiaries of the Registrant
23.1 Consent of Ernst & Young LLP (independent auditors for Media Metrix, Inc.)
23.2 Consent of Ernst & Young LLP (independent auditors for AdRelevance, Inc.)
23.3 Consent of KPMG LLP (independent auditors for Jupiter Communications, Inc.)
23.4 Consent of KPMG LLP (independent auditors for Internet Research Group)
23.5 Consent of KPMG LLP (independent auditors for Net Market Makers)
23.6+ Consent of Fried, Frank, Harris, Shriver & Jacobson (included in exhibit 5.1 and exhibit 8.1)
23.7+ Consent of Brobeck, Phleger & Harrison LLP (included in exhibit 8.2)
24 Power of Attorney (included on the signature page of this registration statement)
99.1+ Form of proxy for the Special Meeting of Stockholders of Jupiter
Communications, Inc.
99.2+ Form of proxy for the Special Meeting of Stockholders of Media Metrix, Inc.
99.3+ Consent of Gene DeRose to appointment as director
99.4+ Consent of Kurt Abrahamson to appointment as director
99.5+ Consent of Robert Kavner to appointment as director
99.6+ Consent of Jeffrey Ballowe to appointment as director
</TABLE>
----------------------
+ To be filed by amendment.
* Incorporated by reference to the Company's Registration Statement on
Form S-1 (File No. 333-72883), filed with the SEC on February 24, 1999,
as amended.
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** Incorporated by reference to the Company's Registration Statement on
Form S-1 (File No. 333-88751), filed with the SEC on October 8, 1999, as
amended.
*** Incorporated by reference to the Company's Current Report on Form 8-K filed
with the SEC on October 20, 1999.
**** Incorporated by reference to the Company's Current Report on Form 8-K filed
with the SEC on March 20, 2000.
*****Incorporated by reference to the Company's Current Report on Form S-8
(File No. 333-39292) filed with the SEC on June 14, 2000.
ITEM 22. UNDERTAKINGS.
(A) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this registration statement, or the most
recent post-effective amendment thereof, which, individually or
in the aggregate, represent a fundamental change in the
information set forth in this registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered, if the total dollar value of securities
offered would not exceed that which was registered, and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) under the Securities
Act, if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration
statement or any material change to such information in this
registration statement;
provided, however, that the undertakings set forth in paragraphs (1)(i)
and (ii) above do not apply if the information required to be included
in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 (the "Exchange
Act") that are incorporated by reference in this registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(B) The undersigned Registrant hereby undertakes, that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit
plan's
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annual report pursuant to Section 15(d) of the Exchange Act) that
is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(C) The undersigned Registrant hereby undertakes:
(1)That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this
registration statement, by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c), the issuer undertakes
that such reoffering prospectus will contain the information called for
by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information
called for by the other items of the applicable form.
(2)That every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements
of Section 10(a)(3) of the Securities Act and is used in connection
with an offering of securities subject to Rule 415, will be filed as a
part of an amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(D)Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
(E)The undersigned Registrant hereby undertakes:
(1)To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of
this Form S-4, within one business day of receipt of such request, and
to send the incorporated documents by first class mail or other equally
prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through
the date of responding to the request.
(2)To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved
therein, that was not the subject of and included in the registration
statement when it became effective.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on July 27, 2000.
MEDIA METRIX, INC.
By: /s/ Tod Johnson
--------------------------------------
Tod Johnson
Chairman and Chief Executive Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes Tod
Johnson and Thomas A. Lynch and each of them, with full power of substitution
and full power to act without the other, his or her true and lawful
attorney-in-fact and agent in his or her name, place and stead, to execute in
the name and on behalf of such person, individually and in each capacity stated
below, any and all amendments (including post-effective amendments) to this
registration statement, any registration statements on Form 462(b) and all
documents relating thereto, and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, and generally to do all such things in his or her name and on his or
her behalf in his or her respective capacities as officers or directors of Media
Metrix, Inc. to comply with the provisions of the Securities Act of 1933, as
amended, and all requirements of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities indicated on July 27, 2000.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Tod Johnson Chairman and Chief Executive
------------------------------ Officer (principal executive
Tod Johnson officer) and Director
/s/ Thomas A. Lynch Chief Financial Officer and
------------------------------ Treasurer (principal financial and
Thomas A. Lynch accounting officer)
/s/ Michael C. Brooks Director
------------------------------
Michael C. Brooks
/s/ William W. Helman Director
------------------------------
William W. Helman
/s/ Stig Kry Director
------------------------------
Stig Kry
</TABLE>
<PAGE> 264
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ James Mortensen Director
------------------------------
James Mortensen
/s/ Randy Pausch Director
------------------------------
Randy Pausch
</TABLE>
<PAGE> 265
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
2.1 Plan of Merger between Media Metrix and PC Meter L.P. dated as of March 31, 1996*
2.2 Plan of Merger and Reorganization between Media Metrix, Inc. and RelevantKnowledge dated as of
September 30, 1998*
2.3 Agreement and Plan of Merger dated as of October 6, 1999, by and among Media Metrix, AdRelevance,
Merger Sub and the stockholders of AdRelevance named therein***
2.4 Share Purchase Agreement dated February 8, 2000 among SIFO Group AB, Osprey Research BV and Media
Metrix, Inc.****
2.5 Agreement and Plan of Merger, dated as of June 26, 2000, among Media Metrix, Inc., MMX Acquisition
Corp. and Jupiter Communications, Inc. (included in this joint proxy statement/prospectus as Annex
A)
3.1 Amended and Restated Certificate of Incorporation of Media Metrix, Inc.*
3.2+ Form of Amended and Restated Certificate of Incorporation of Media Metrix, Inc.
3.3 Certificate of Amendment to Amended and Restated Certificate of Incorporation*
3.4 Amended and Restated Bylaws of Media Metrix, Inc.*
3.5+ Amendment to Amended and Restated Bylaws of Media Metrix, Inc.
4.1 Registration Rights Agreement dated as of November 5, 1998, by and among Media Metrix and the
Stockholders listed on Schedule I thereto*
4.2 Specimen Stock Certificate*
4.3 Registration Rights Agreement by and among Media Metrix, GfK AG and Ipsos S.A. made as of September
1, 1999**
4.4 Stock Option Agreement by and between Media Metrix and GfK made as of September 1, 1999**
4.5 Stock Option Agreement by and between Media Metrix and Ipsos made as of September 1, 1999**
4.6 Registration Rights Agreement dated October 8, 1999 by and among Media Metrix and the security
holders of Media Metrix set forth on Schedule I thereto***
4.7 Warrant to purchase common stock held by Silicon Valley Bank**
4.8 Registration Rights Agreement dated March 6, 2000 between Osprey Research BV and Media Metrix,
Inc.****
4.9 Media Metrix, Inc. Stock Option Agreement dated March 6, 2000 between Osprey Research BV and Media
Metrix, Inc.****
4.10 Amendment to Registration Rights Agreement dated March 6, 2000 among GfK AG, Ipsos SA, Osprey
Research BV and Media Metrix, Inc.****
5.1+ Opinion of Fried, Frank, Harris, Shriver & Jacobson
8.1+ Opinion of Fried, Frank, Harris, Shriver & Jacobson (tax counsel to Media Metrix, Inc.)
8.2+ Opinion of Brobeck, Phleger & Harrison, LLP (tax counsel to Jupiter Communications, Inc.)
</TABLE>
<PAGE> 266
<TABLE>
<S> <C>
9.1 Voting Agreement among Jupiter Communications, Inc., The 1995 Stacey Johnson Trust, The 1995 Scott
Johnson Trust and The NPD Group, Inc., dated June 26, 2000 (included in this joint proxy
statement/prospectus as Annex B)
9.2 Voting Agreement among Media Metrix, Inc., Ernest Abrahamson, Kurt Abrahamson and Gene DeRose, dated
June 26, 2000 (included in this joint proxy statement/prospectus as Annex C)
10.1 Building Lease between Eagle Insurance Company and The NPD Group, Inc. dated as of August 18, 1997*
10.2 Lease Agreement between Carriage House Associates Limited Partnership and RelevantKnowledge, Inc.
dated as of May 16, 1997*
10.3+ Lease Agreement between 352 P.A.S. Associates and Media Metrix, Inc. dated as of March 1, 2000
10.4+ Sublease between The NPD Group, Inc. and Media Metrix, Inc. dated as of April 2000
10.5+ Sublease between TMP Worldwide, Inc. and Media Metrix, Inc. dated as of April 2000
10.6+ Lease Agreement between Grace Brusseau, individually, and Grace Brusseau and Stephen Kay,
co-trustees of Testamentary Trust of Michael J. Borelli, dba Grazia Investment Company and Media
Metrix, Inc. dated December 17, 1999
10.7 Services Agreement dated as of September 30, 1998 by and between Media Metrix and The NPD Group,
Inc.*
10.8 License Agreement dated as of November 5, 1998 by and between Media Metrix and The NPD Group, Inc.*
10.9 Form of Indemnification Agreement*
10.10 Form of Non-Disclosure Agreement and Confidential Information and Invention Assignment Agreement*
10.11 Form of Non-Disclosure Agreement and Confidential Information and Invention Assignment Agreement*
10.12 Amended and Restated Management Services Agreement by and between Media Metrix, The NPD Group, Inc.
and Tod Johnson*
10.13 Media Metrix Stock Option Plan*
10.14 1998 Equity Incentive Plan*
10.15 1998 AdRelevance Stock Option Plan**
10.16 1999 AdRelevance Stock Option Plan**
10.17 Media Metrix, Inc. 2000 Equity Incentive Plan*****
10.18 Media Metrix, Inc. 2000 Employee Stock Purchase Plan*****
10.19 Media Metrix, Inc. Amended and Restated 2000 Equity Incentive Plan
10.20 Media Metrix, Inc. Amended and Restated 2000 Employee Stock Purchase Plan
21 Subsidiaries of the Registrant
23.1 Consent of Ernst & Young LLP (independent auditors for Media Metrix, Inc.)
</TABLE>
<PAGE> 267
<TABLE>
<S> <C>
23.2 Consent of Ernst & Young LLP (independent auditors for AdRelevance, Inc.)
23.3 Consent of KPMG LLP (independent auditors for Jupiter Communications, Inc.)
23.4 Consent of KPMG LLP (independent auditors for Internet Research Group)
23.5 Consent of KPMG LLP (independent auditors for Net Market Makers)
23.6 Consent of Fried, Frank, Harris, Shriver & Jacobson (included in exhibit 5.1 and exhibit 8.1)
23.7 Consent of Brobeck, Phleger & Harrison LLP (included in exhibit 8.2)
24 Power of Attorney (included on the signature page of this registration statement)
99.1+ Form of proxy for the Special Meeting of Stockholders of Jupiter Communications, Inc.
99.2+ Form of proxy for the Special Meeting of Stockholders of Media Metrix, Inc.
99.3+ Consent of Gene DeRose to appointment as director
99.4+ Consent of Kurt Abrahamson to appointment as director
99.5+ Consent of Robert Kavner to appointment as director
99.6+ Consent of Jeffrey Ballowe to appointment as director
</TABLE>
----------------------
+ To be filed by amendment.
* Incorporated by reference to the Company's Registration Statement on
Form S-1 (File No. 333-72883), filed with the SEC on February 24, 1999,
as amended.
** Incorporated by reference to the Company's Registration Statement on
Form S-1 (File No. 333-88751), filed with the SEC on October 8, 1999, as
amended.
*** Incorporated by reference to the Company's Current Report on Form 8-K filed
with the SEC on October 20, 1999.
**** Incorporated by reference to the Company's Current Report on Form 8-K filed
with the SEC on March 20, 2000.
*****Incorporated by reference to the Company's Current Report on Form S-8
(File No. 333-39292) filed with the SEC on June 14, 2000.
